Committee Hearing, November 8, 2001

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON EDUCATION - - - Room 401, City Hall Philadelphia, Pennsylvania Friday, November 8, 2001 2:00 p.m. - - - RESOLUTION 010642 - authorizing City Council's Committee on Education to conduct joint hearings with the Board of Education of the School District of Philadelphia to examine the findings and recommendations set forth in the report of Edison Schools, Inc., concerning the future of Philadelphia School District. - - - PRESENT: COUNCILWOMAN DONNA REED MILLER, Chair COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN WILSON W. GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN RICHARD T. MARIANO COUNCILMAN MICHAEL A. NUTTER COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 (215) 561-2220 2 PRESENT (continued) REPRESENTATIVE LEANNA WASHINGTON, Chair REPRESENTATIVE LOUISE BISHOP, Chair SENATOR SHIRLEY KITCHEN REPRESENTATIVE JOHN MEYERS REPRESENTATIVE HAROLD JAMES REPRESENTATIVE RON WATERS REPRESENTATIVE MARK COHEN REPRESENTATIVE JEWELL WILLIAMS REPRESENTATIVE W. CURTIS THOMAS CONGRESSMAN CHAKA FATTAH PHILADELPHIA SCHOOL BOARD PEDRO RAMOS, President SANDRA DUNGEE-GLENN DOROTHY SUMNERS-RUSH MARTIN BENARIT AMELIA MADDOCK COALY JAY COOPER MICHAEL MATT - - - 3 I N D E X RESOLUTION 010642 PHILIP GOLDSMITH .............................. 33 RHONDA CHATZKEL ............................... 63 CHRIS WHITTLE ................................. 75 TOM STEWART ................................... 79 JOHN CHUBB .................................... 81 VANELLE MIDDLETON ............................. 82 DAVID GRAFF ................................... 84 ADAM TUCKER ................................... 86 STEVE TRACEY .................................. 87 EUGENE WAYDE .................................. 89 CHRIS SURF .................................... 92 DEBORAH MCGRIFF ............................... 95 REV. FLOYD FLACK .............................. 98 TED KIRSH ..................................... 220 LOIS YAMPOLSKY ................................ 234 JOLLEY CHRISTMAN .............................. 237 ROTAN LEE ..................................... 244 MICHAEL CHURCHILL ............................. 263 WENDELL HARRIS ................................ 277 SARAH GILLIAM ................................. 282 HELEN GYM ..................................... 283 SHELLY YANOFF ................................. 287 BARBARA DOWDALL ............................... 288 EDWARD SCHWARTZ ............................... 289 4

Good afternoon. The hearings are about to begin. Can we have quiet, please? The noise level in here is pretty high. This afternoon we have the unique opportunity to have a joint hearing with the Pennsylvania Legislative Black Caucus and other members from the Pennsylvania House of Representatives, of course, Philadelphia City Council and its members of the Education Committee and other members, and we also have as our partners in this hearing today the Board Members from the School District, School District of Philadelphia. Will the Clerk please read the resolution?

Resolution 010642, authorizing City Council's Committee on Education to conduct joint hearings with the Board of Education of the School District of Philadelphia to examine the findings and recommendations set forth in the report of Edison Schools, Inc., concerning the future of Philadelphia School District.

Thank you. In attendance today -- and you're going to have to bare with me, Representative Washington, we just need for the record to state who is here. We have 5 11/8/01 - EDUCATION - RES. 010642 Councilmember Ortiz, Councilwoman Blackwell, Councilmember Clarke, State Representative John Meyers, State Senator Shirley Kitchen, Councilmember Blondell Reynolds-Brown, Councilman Wilson Goode, Jr., State Representative Harold James, State Representative LeAnna Washington. My name is Councilwoman Donna Reed Miller. We have School Board President Pedro Ramos, State Representative Louise Bishop, School Board Member Sandra Glenn, School Board Member Dorothy Rush.

Sandra Dungee-Glenn, Vice President; Dorothy Sumners-Rush, Member Martin Benarit, Member Dr. Amelio Matticoli, Student Representative Joy Cooper, and Member Michael Matt. REPRESENTATIVE WASHINGTON: And in the rear we have State Representative Ron Waters and State Representative Mark Cohen, and State Representative Jewell Williams, State Representative Larry Curry, State Representative W. Curtis Thomas.

Thank you all for coming and thank you for having an interest in our children. Before we begin, I want to explain the format for today. We hope that this hearing will 6 11/8/01 - EDUCATION - RES. 010642 conclude somewhere around 6:00, 6:30. We have about 35 people scheduled to testify. So we want you to keep your testimony brief. Shortly, we'll figure out how any minutes we're going to allow you to go. Opening statements should not exceed more than two minutes. And when we adjourn today, we will recess until Saturday morning. , and the hearings will continue Saturday. So far, we have about 10 different people that are scheduled to testify on Saturday, and the list is growing. We thank you for attendance today. And we also are joined by Councilman Michael Nutter. We thank you for your attendance today and for your commitment to the future of the children of Philadelphia. I have a list of Councilmembers and State Representatives and other people that want to make an opening statement. If you haven't told me that you want to be included with the opening statement group, please do so now. Let's begin. We've come together once again united by 7 11/8/01 - EDUCATION - RES. 010642 our commitment to the children of Philadelphia. Nearly 2 million children go to public school in Pennsylvania and over 200,000 in Philadelphia. Only half get what they need, a good job or an opportunity to go to college. For nearly a million Pennsylvania Public School students, education does not come with a happy ending. Here in this 11th hour, we have less than a month to find our way. Our children deserve a high level of education. We all know what makes good schools work: Adequate funding, small classes, good, well-paid teachers, challenging curricula standards and assessment. The Edison report reflects back to us what we already know and what we are already doing or in the process of doing. Many low-performing schools are performing. New academic models and literacy initiatives are making a difference. What we do not need is a hostile takeover of our system from the outside. What we do not need is unproven and untried schemes that are launched without the benefit of intensive dialogue with those of us who have been living in the school struggle in Philadelphia every day. 8 11/8/01 - EDUCATION - RES. 010642 We have determined our commitment to the CEO model as well as to the reality of charter change which gives the Mayor broader authority over the District. We must work together to realign roles, responsibilities, and functions. We must make the public debate about education as broad as possible. We must listen to people propose a change and learn from them. They must also listen to and learn from us. We must exercise our fiduciary responsibility to our children by capturing the rewards and benefits of any report without the unprecedented risk of having our school system taken from our hands and entrust it to untried, unproven, inexperienced alternatives with questionable track records of success. We cannot allow our school system to become hostage to Wall Street. We must consider our current fiscal realities. The nation is slipping into a recession, which will impact the revenues of private companies which provide educational services and which will ultimately impact our students as well. Of course, we must remain open to new and responsible education and financial alternatives. I want to echo CEO Phil Goldsmith's charge, neither 9 11/8/01 - EDUCATION - RES. 010642 the District or City can succeed without the State's help. It is equally clear that the State cannot effectively succeed without the City's help. As in all human endeavors, everyone must leave the table feeling heard, valued, and empowered if there is to be any chance for a successful change. Let us use our mouth well. If our children are at risk, so is our future. The children are watching. Thank you. REPRESENTATIVE LEANNA WASHINGTON: Good afternoon.

My name is LeAnna Washington, Chair of the Pennsylvania Legislative Black Caucus. I'm an advocate of public education and, more importantly, of quality education that assures African-American and Latino children, the most socially and economically disadvantaged amongst the City's public school population, every opportunity to compete. Few would argue that the current quality of public education in this City meets either regional, state, or national standards, and the dismal academic performance of the Philadelphia Public School students provide the best evidence of that tragic reality. It is little comfort to know that Central Masterman and the High School of the 10 11/8/01 - EDUCATION - RES. 010642 Performing Arts, as examples, are beacons of the national academic excellence when the overwhelming percentage of Philadelphia Public School population is academically deficient and is forced to enroll in schools which physically plants are in gross despair and which are technologically unready and substandard and in all too many instances are the haunting grounds of social predators, those bent on our children's addictions and moral turpitude. That our comprehensive high schools and their feeder schools do not ready our children is a travesty requires the most the radical reform before they're able to nuture a productive motivated and technologically oriented next generation. How real and, yes, radical education reform occurs is a righteous matter of public debate. And It is appropriate. It is not essential for serious confrontation of old and new ideas of differing methodologies in a competing politics to serve as the lighting rods. That the current former governor advocated takeover to the failing public school systems heightens the debate, further stretching the already raw nerves by suggesting privatization as a primary capitalist of change. 11 11/8/01 - EDUCATION - RES. 010642 Placing Edison Schools, Incorporated, as the effigy of the school states unfair and carefully distinguished refusal to adequately fund the School District of Philadelphia. All in all, one would have to admit the deluge of numbers which often comprise clear thinking, which is why my remarks are devoid of competitive and insensitive numbers. " I am here to facilitate the broadcast possible discussion on education, allowing for the broadest base of participation, hearing from those who have something to say. I'm in pursuit of the voice of the people, the parents, students, teachers and community advocates who are, after all, the principal stakeholders. That no reform or decision speaks to the people's voice on school privatization is unfortunate. Notwithstanding the apparent and widespread opposition and concern to such a course of action. Nonetheless, the objective of this joint hearing is to afford the people a chance to speak 12 11/8/01 - EDUCATION - RES. 010642 and, therefore, it is the responsibility of the Legislative Black Caucus, the Philadelphia City Council to deliver the people's message to the Governor and to the Mayor of this City. Though I'm not without my own opinion on public opinion reform and privatization, it is my responsibility to provide a forum for the fair exchange of ideas, the point of views and the perspectives. And in that vein, it would be inappropriate for me to sway public opinion one way or another. To do so would undermine the purpose of these hearings, a forum for discussion as opposed the a rally around a single idea or ideal. I will exercise one discretionary point of order. It is the future of this and the next generation that is at risk here. Whatever the result, it must weigh highly to the benefit of our children. Thank you, and let's move on with today's agenda. )

Thank you, Representative Washington. For the record, we also want to note that we've been joined by Councilwoman Joan Krajewski. 13 11/8/01 - EDUCATION - RES. 010642 State Representative Louise Bishop, Chair of Pennsylvania Delegation. REPRESENTATIVE LOUISE

Thank you very much, Madam Chairlady and Madam Chairlady also and all of the Council Representatives and the General Assembly, School Board Members and parents, teachers, supporters and friends of public education. I am here today, as many of my colleague are, for one particular reason and one reason only: The concern for education and the educational needs of Philadelphia's school children. It comes without saying that this should be the driving force behind any effort to improve the School District, which we all recognize is struggling and in need of reform. Sadly, the question becomes today, is that really the case? Is that really the action that is being taken? For the recent action by the State creating a School Reform Commission, doesn't appear to be about educating the students as much as it appears to be about taking away control of the local level. (Applause.) REPRESENTATIVE

The commission is given many broad powers, but none that address 14 11/8/01 - EDUCATION - RES. 010642 the real problems facing the Philadelphia School District. The District, as well as Pennsylvania's other urban districts, faces unique challenges in 5 educating students that their suburban counterparts 6 rarely have to face or deal with, if ever. Teachers 7 in many urban districts are forced to be first 8 become surrogate parents and counselors to students. 9 Many times they even have to just be a friend or a 10 loved one. 11 Living in extreme poverty and liking any 12 type of structured home makes environment very 13 difficult to teach in public school. The resulting 14 social problems present serious obstacles to the 15 educational process. If we truly want to help the 16 District improve, then we must first find ways to 17 give it the tools and resources needed to overcome 18 these challenges. Thus far, the State has been 19 unwilling to do this. Without helping schools 20 address the unique social issue that many students 21 and their families encounter, it is going to make 22 little difference in the end if the State or private 23 company operates the School District. I am not 100 percent sure there is any elected official from Philadelphia who does not want 15 11/8/01 - EDUCATION - RES. 010642 to see our District improve and better serve the educational needs of our children. We all want that. Not only elected officials, parents want that, teachers want that. But the question becomes whether or not a State takeover, whether or not privatizing our schools is the right solution for the problem that is ahead of us. (Applause.) REPRESENTATIVE

So as this hearing begins, it is our hope that we will get some input from others around the City of Philadelphia who is going to help us to set a focus on what is ahead of us. Thank you so very much. (Applause.)

I'd just like to make a note for the record that we've been joined by Vivian Miller, our Clerk of Court of Sessions and Member of Black Elected Officials. I think she's the first vice chair or second vice chair. And also we've been joined by Councilman Frank Rizzo. We're also going to have some brief comments in this order Councilwoman Blondell Reynolds-Brown, Councilwoman Jannie Blackwell. And after Councilwoman Blackwell, we'll have Pedro 16 11/8/01 - EDUCATION - RES. 010642 Ramos. Thank you

Good afternoon. The record should reflect that there has been an important miss-step on the road to receiving the report from Edison. It is the understanding of many of the Members of Council that the opportunity was not had for the CEO of our schools to have a dialogue, a meeting, a discussion on where we are with the Philadelphia School District. So we appreciate the opportunity to sit with and be with members of the Legislative Black Caucus, all of us who, as representative LeAnna Williams has already said, are friends of public education. This is the opportunity to hear from those who want to take over the Philadelphia School District. At the end of the day, it boils down to lack of dollars. Give Philadelphia School Board what our suburban counterparts already have. The per pupil spending for young people 12 miles from where we sit is $12,000 per student. The per pupil spending for young people, 219 who are currently enrolled in the Philadelphia School System is $6,500. Equity is the question at hand. Thank you very much. (Applause.) 17 11/8/01 - EDUCATION - RES. 010642

Good afternoon, Madam chair, esteemed panel guests, members of the School Board, parents, teachers, and other concern citizens of public education. I speak as vice chair of the City Council Committee on Education. As we open this public dialogue to discuss Edison's report findings, it is necessary to remember the context of the larger issue; The growing movement toward the privatization of public education and which this current debate is embedded. Public education was founded in the 19th Century to train a mass immigrant work force to the needs of the industrial age employers. Since then, it has been a poor reflection of the many challenges faced by our nation, including the integration of all American citizens, new immigrants, changes in workplace demands, and new skills developed through technology. The public education system, properly valued and financed, remains the one government institution that evens the playing field for all children, instilling dignity, self-respect and the opportunity for financial gain. Within the African-American community, lives were loss in the fight to educate our children 18 11/8/01 - EDUCATION - RES. 010642 to better their opportunities. We must not forget this history and continue to fight for education and inclusion. Given this history of flexibility, compromise, and cooperation, I firmly belief that the people in this room have the power and ability to meet the concerns of this current challenge and to institute a plan that properly prepares our children for the new workforce demands of a globalized economy, given fiscal, administration, and contact management crises that we are facing today. I would like to thank Governor Schweiker for his proposal and acknowledge Edison's development of the plan. All of us as leaders need to agree that we are failing the 200,000-plus students within our system. 5 million residents in 19 11/8/01 - EDUCATION - RES. 010642 Philadelphia. It is our Godly duty as trustees of the public trust to speak up on this at a time when our rights as citizens are being challenged with the installation of a non-elected commission that has the ability to raise taxes, spend our money, tax dollars and influence the mindset in the system of educating our children that we are facing today. To this end, I would like to offer some suggestions so that we don't limit ourselves to a discussion on Edison as if we have accepted this is our only fate. We must expand our thinking to other possibilities and demand that they be injected into the future negotiations. Number one, we must re-prioritize our goals for school reform. While fiscal management is the leading concern, we fear drastic results in the way of layoffs of low-income jobs, including janitors, cafeteria workers, security guards, et cetera. Instead, as a last resort, we recommend an objective, non-partisan board supported by local and state officials, possibly modeled from PICA that will maintain fiscal management and distribute local school funds. We also recommend that our Controller have the authority to audit all funds. 20 11/8/01 - EDUCATION - RES. 010642 Number two, the selection process of private operators should be an open process issued through a request for proposals with a defined set of fiscal, administrative, and quality control standards to reduce local patronage and continued low performance. We would like to set a of criterion based best practices used by schools identified in the top performance tier that potential school managers must prove they can meet.

The potential of the providers could also publicize in local paper a capacity statement that lists, one, financial capacity; two, quality of educators; three, a detail plan for reaching performance benchmarks; four, residential and parental letters an support; five, record of previous experience; six, highlighting plans that include how they will absorb current personnel; seven, a statement of value added, that is, what will children receive going to the new school that they do not have on the current system; Eight, parental grievance police; and number nine, linkages and matriculation plans. Will the schools be K to 8? Will they be theater schools? Will they feed into other schools with different philosophies? Upon graduation, will the 21 11/8/01 - EDUCATION - RES. 010642 student be prepared to go to college or to the workforce? Three, dividing schools into three groups based on performance standards and then setting up management approaches targeting those three groups appears to set up entrenched systemic divides that will not help enhance education among students in the lowest performing schools, but send them further behind. This approach also attacks students self-esteem and pushes blame to the community level versus in the administration arena where it should be. Further, African-American children have been subjugated to so many forms of experimentation. It is time that we stop lowering and experimenting with standards for all our children and make them consistent with those in the highest performance schools to give our children a chance. I will never forget last spring when I sat on panel sponsored by McDonalds to review applications for a college scholarship that at least 3,000 essays I read from African-American high school students in senior public schools express these things: They felt that their own potential 22 11/8/01 - EDUCATION - RES. 010642 far outweighed the foresight of teachers and community leaders. Therefore, a possible better method of implementation would be: One, rank all schools, public and charter. Two, expand the capacity of top-performing schools with necessary resources by percent to reduce waiting lists. 10 Three, group all remaining schools so that the poorest performing schools are not marginilized and stigmatized. But instead, have expectations and standards that are raised to the level of the highest performance schools. Four, develop a common formula for success creating by administrative of the top-performing schools and formulate an RFP. Five, give authority to current principals to act and form an independent public entity so that they too can respond to RFPs and also be able to compete to manage their schools that they now have. Six, review the current school inventory and consolidate and streamline resources and buildings and environments. 23 11/8/01 - EDUCATION - RES. 010642 Seven, develop a transition team of parent advocates contracted with neighborhood community organizations to work with individual households and help parents select the best school that is will meet their child's needs. In conclusion, we know from experience with the implementation of welfare reform that a strong fiscal approach based on financial cost-saving benchmarks and quantitative standards to social problems without establishing best practices that address quality is not necessarily successful. Providers come and go due to new cash flow constraints. Standards differ and are inconsistent. Recipients are cow-herded into a few options regardless of need, and those that are unable to cope bear the responsibility for of blame further ensuring a cycle flow self-esteem, low participation in society and despair. We now have the opportunity, ladies and gentlemen, to make a difference. Let's go forward and take responsibility for our children. Thank you.

Councilman Ortiz.

Thank you, Madam 24 11/8/01 - EDUCATION - RES. 010642 Chair. I'm going to be very brief. The last few weeks and months we have been debating the school issue in this Council and across the City. The thing is that the people who have not been consulted are the people of Philadelphia. (Applause.)

It seems that agreements and deals were made and the people that have not been consulted were the School Board of Philadelphia. (Applause.)

It seems that plans, proposals, contacts have been given and the people that have not been consulted have been the teachers and principals of Philadelphia. (Applause.)

It seems that the students have been put to one side as we discuss how much money and how many contracts we can be given. They have not been consulted. (Applause.)

What we have to understand is that over the years, the Board of 25 11/8/01 - EDUCATION - RES. 010642 Education of this City has taken on the task of really streamlining and studying all of the mechanisms of cost savings that they what have. Mike Mash, who has done work with the City government is probably one of the best minds in terms of cost savings that we can have of any school board in the country. The problem in Philadelphia is one that no one is really speaking about, school reform. School reform is not privatizing. Privatization is not school reform. (Applause.)

We're not talking about putting kids per classroom. When we talk 16 about $51 million of a paint job , I don't want a 17 $51 million paint job for our schools. I want 18 Sheppard, I want Cramp, I want those buildings torn 19 down and new schools built, not painted. 20 (Applause.)

When we talk about reform, we mean that teachers get an inadequate salary so we can entice teachers to come to Philadelphia, so that we can pay them a living wage, so we can be competitive with the suburbs. And that 11/8/01 - EDUCATION - RES. 010642 means money from the state government. (Applause.)

When we mean reform, we mean that we establish a training program for principals, teachers, para-professionals that we have in the school system and pay them an adequate wage. And that means money from the State government. (Applause.)

$75 million for the state government is not going to carry us for far, Not going to do it. I have two kids in public schools, two kids, six, second grade. I want those kids to succeed. I don't want people who manage my system to be looking at the Dow Jones average every day to see whether it goes up or down. (Applause.)

So I have made up my mind about what is needed. I have made up my mind. The State has neglected us and we cannot just keep on putting that aside. We are the forgotten individuals of public school systems in the Commonwealth of Pennsylvania. (Applause.) 27 11/8/01 - EDUCATION - RES. 010642

We represent 40 percent of the total poverty population of the state. We don't get a commensurate with that percentage of poverty. We have different problems in this City. Education has to work because that is the only way we can make it out of the slums, the ghettos, the tenements, row houses, and become productive citizens and stop filling our jails. We build more new jails in this Commonwealth than we build schools. (Applause.)

So I have made up my mind. I can tell you, rocket science reform it is not. We need smaller classes, teachers that get better paid. We need kids with books on every subject. We need computers on every desk. We need people who come in and are concerned and committed. We do not need an outside colonialist government coming in and running the Philadelphia City School System. Public means public. It means accountable to the people that they teach and they serve. This is, what we're discussing, is a imposition and a grab for power. Thank you, Madam Chair. (Applause.) 28 11/8/01 - EDUCATION - RES. 010642

I just want to make note for the record that we've been joined by Council President Anna Verna and School Board Member Reverend Ralph Blanks. Our last opening comments will be from Pedro Ramos because we really want to get to the business of the hearing. Thank you.

Good afternoon, President Verna, Chairwoman Miller, Chairwoman Washington, Chairwoman Bishop, Members of City Council, colleagues on the School Board and Members of the General Assembly and assembled guests. I'm Pedro Ramos, President of the Board of Education of School District of Philadelphia. More importantly, at least to me, I'm the parent of two children of Philadelphia Public Schools and a graduate of Philadelphia Public Schools. (Applause.)

I want to thank you for your invitation to co-chair this hearing on the findings of recommendations of the Edison report concerning the future of the School District and the more than 200,000 children it serves. I've had the pleasure of visiting this Chamber many times during my tenure 29 11/8/01 - EDUCATION - RES. 010642 as a board member, as vice president and as president, and I look forward today to another instructive afternoon as we explore the facts and discuss the recommendations set forth as the basis for the Governor's proposal to reform the District. A quality system of public schools is critical to the future of our City, our region, our Commonwealth, and indeed our nation. While people of goodwill be can and do disagree about the best way to achieve consistent quality we need from our schools, it is vital that decisions about how to change a system are based on facts, not anecdotes; reality, not rhetoric; substance, not assumptions; and the best interest of our students, not the self-interests of a few adults. (Applause.)

It is my hope that these hearings will help bring forward a fair discussion of the facts of our District. In recent years, this District has undertaken major corrective steps in our management, labor contracts, and instructional operations. We agree that the status quo is not enough. Regardless of whether we serve on the board, We stand ready to raise even more radical 30 11/8/01 - EDUCATION - RES. 010642 change as long as it is changed for the right reason, change focused on the enhancing our students academic achievement and stabilizing the district's financial condition, not change for change of sake or change for the sake of any individuals. We plan to the listen to the speakers today in order to learn from them and about them. We also hope the speakers do some listening, too, maybe even learn more about the District or City which they intend to occupy. This afternoon, the School District interim chief executive officer, Phil Goldsmith will give his analysis of the Edison report and the Governor's proposal based on the somewhat limited data and recommendations staff and the Board have seen so far. We hope to gain clarity from Edison's representatives on the details of their report; and doing so, understand more thoroughly what the company envisions for its role in the District's future. We also look forward to hearing other witnesses understanding of the report, what's right with it, what's wrong with it from their perspectives as parents community leaders, political leaders and concerned citizens. It is only by 31 11/8/01 - EDUCATION - RES. 010642 hearing from the spectrum of Philadelphia that we as a city should go forward with radical changes in the way we deliver public education. I urge all the witnesses to speak to the facts and deliver their opinions on the report confident that even if we disagree, we do not dismiss each other's viewpoints. Let me be clear the Board's goal in these hearings is to focus on the substance of what is being recommended, not on ideologies or under agendas. What we want is a thorough public review of the facts and possible changes as described in the Edison report and the Governor's proposal. While urban public education has historically suffered from racial segregation, financial divestment by states, anti-urban biases, and bureaucratic systems and cultures that favor adults over children, public education generally has been critical to the creation and maintenance of the world's greatest middle class and the strongest, most diverse democracy in the world. The challenge for our generation is to fix public education, not eliminate it. (Applause.)

I want to thank our guests 32 11/8/01 - EDUCATION - RES. 010642 and public officials for joining us. I want to also thank in advance our guests from the Edison Company for dedicating time to this hearing this afternoon. We're ready for the dialogue to begin. Thank you for your time, Madam President and Chairs Miller and Washington.

Thank you. We're going to start if hearing off from comments of -- testimony actually. Our first witness is the interim president of School District of Philadelphia -- CEO, actually, Phil Goldsmith. As you come up to the witness table, please state your name and any other identifying information. And if you have a difficult, please spell it for the record. Thank you. And please speak into the mike. Actually, you have to speak into both mikes. REPRESENTATIVE WASHINGTON: Before we start, I just want to make comment Pennsylvania Cable Network is here and will be taping the entire hearings. And before we leave, we'll let you know when you'll be able to view it on TV.

That's why you have to speak into both mikes because one is theirs. 33 11/8/01 - EDUCATION - RES. 010642

My name is Philip R. Goldsmith, interim chief executive officer of the School District of Philadelphia. Representatives Washington and Bishop and Members of General Assembly, Council President Verna, Councilwoman Miller, Members of City Council, President Ramos and Members of the Board of Education, I come here neither to bury Edison nor to praise the status quo. I come here as an individual who has worked in both the private and public sectors, Most recently as interim chief executive officer of the School District of Philadelphia. I know firsthand how much needs to be changed. I know firsthand how difficult it is to make change. But I also believe that we do not need wholesale privatization to make change. (Applause.)

In fact, I believe it will produce just the opposite result. Inaction. There will be protracted litigation, rancor, dissension, and bitterness. That's what has plagued the School District for far too long. I believe that the only way we will ever create the necessary change in public education is if we are all working 34 11/8/01 - EDUCATION - RES. 010642 together, not against each other. (Applause.)

That means finding common ground, not a battle ground, with cooperation, compromise and common sense. I believe that we can find common ground without assuming undue or unnecessary risk. I began my stint as interim chief executive officer as the District on November 1st, the year 2000. I spent the first several weeks finding my way around. On December 18th I issued a status report of my observations and plan to Members of the Board. In it, I said the following: There are many commitment dedicated and resilient employees at the School District. But there was inadequate depth of management. Basic management practices were lacking. There was inadequate prioritization and focus. There was inadequate monitoring or analysis of results. There were inadequate controls to support a large distributive system and network. The span of control was too large or too small. Too many kids in our classroom, too many cluster leaders in the field. There were inadequate financial information systems. There was 35 11/8/01 - EDUCATION - RES. 010642 a lack of effective and coherent information technology process. I stated that I thought children achieving was too ambitious in its implementation. Major stakeholders felt alienated. The expansion of clusters had occurred without adequate controls resulting in inconsistency in teaching and learning and in some cases ineffective of utilization of resources. I concluded by saying that we have tried to do too much with too little money, people, systems, controls, and buy-in. I compared the School District with Niagara Falls running through a rusty kitchen spigot. I said we had to slow down the flow and strengthen the plumbing. My Final words were focus, focus, focus. Members of the Legislator, Members of City Council, Members of the Board, if that litany sounds familiar, it's because that is basically what Edison reported as its findings, except Edison ignored many of the changes we have made simply been talking about it. We've been doing something about it. Just as the new CEO chief academic officer governance, this Board put in place intended to happen. We have significantly slowed down spending. We have cut overtime, reduced travel, cut out 36 11/8/01 - EDUCATION - RES. 010642 frills, only filled positions when necessary. We have reorganized the administrative function by cutting the cluster system by more than a half. Have placed the focus on instruction, reassigned teachers to the classroom, reduced more than 190 administrative positions, developed a new curriculum plan, hired a new chief safety executive, are implementing a new safety plan and redesigning special ed in our disciplinary functions. We have cut more than $20 million from the budget. We have Even reduced some administrators salaries. We have contracted out, that is, privatized, two disciplinary schools, Community Education Partners. We have tried to deal fairly with people by applying an intensive competitive interview process and appointing our economic officers and other key positions. We put together a multi-year plan whose financial forecast was basically confirmed by Edison. I want to repeat that. Our financial forecast was confirmed by Edison. We spent hours on that plan, tried to brief legislators and members of the Governor's office and others on this plan. I was never surer whether anyone read it until I saw it in the Edison 37 11/8/01 - EDUCATION - RES. 010642 report. Then I saw many of our suggestions repeated back to us: Sell 21st Street, due deficit financing, deal differently with business support services, increase Medicaid collection. And Let me add something, we didn't suggest selling 21st Street as a symbol, but because we need money to educate our children. (Applause.)

Let me give you another example of the way that we have gone about doing things. For more than a year, we had chaos in our payroll department, one of the results of a lousy decision to buy a lousy computer system a few years ago. Each payday we had to accommodate angry employees so we could write them checks they hadn't received. Hundreds upon hundreds of people had to wait in our auditorium . This past pay period, we only had inquiries out of more than 20,000 20 employees. Did we privatize? No. But our payroll 21 director, Sue Gilbert, did come from the private 22 sector. She understands business processes. She 23 reorganized the department, Eliminated overtime More 24 than $100,000 a year. Put new procedures in place. Enhanced training for our schools. Reduced a 38 11/8/01 - EDUCATION - RES. 010642 backlog of 3800 termination pays to virtually nothing. Wrote new job descriptions. And did it with the cooperation of our unions. We haven't done it with a lot of noise or a lot of fuss; we've just done it, and with a focus on instruction in the classroom. We have even started to see a ray of sunshine through the storm clouds of fiscal and political tumult. Listen to an e-mail that Dr. Deidra Farmbry, our chief academic officer, and I received from a principal who wrote a month or so ago. "Hi, Phil and Deidra. This is the first time in 27 years that I can really sense a new focus in instructional support. It is nice to go to staff meetings and just talk about instruction, not 10 million other things that often throw us off course. Just thought you could use some good news." With the support of this Board, these accomplishments were done by a team of people. Dr. Farmbry and Rhonda Chatzkel, our CFO, and many more. I will be eternally grateful to them. They are true public servants. Our system is filled with them, usually unappreciated and unsupported and now facing one of the most frustrating situations I've ever 39 11/8/01 - EDUCATION - RES. 010642 experienced in my career. They and, most importantly, our students have become pawns in a political chess game that is about to lead us down a very, very slippery slope that will take it us years and years to recover from unless goodwill and reason rears its head in the next days. 8 Now, do I think we've done enough? Of 9 course not. Do I think we have all the right people 10 in place? Of course not. Do I think we need more 11 choice and competition and accountability? Yes, I 12 do. But imagine what could have been done this past 13 year if we weren't on the verge of bankruptcy, If we 14 had been engaged in constructive discussions, not a 15 game of political chicken with the Commonwealth. (Applause.)

Imagine what a permanent CEO could do if he or she could recruit fresh, new talent and ideas to the district. I am saying this not because I've been trying to hang on; I've been trying to leave for months. I say it because I can say it because I'm not trying to stay on. My point is to draw a distinction between good business practices and privatization. 40 11/8/01 - EDUCATION - RES. 010642 (Applause.)

They are not one in the same. You can indeed install good business practices without privatization. If you hire the right people, let them do what they know best and, yes, give them some resource so they can invest in meaningful change. (Applause.)

One of the business concepts I spoke about on Monday at the Board meeting is risk reward. It's very basic. In fact, it's as old as Adam and Eve. And it's through the pragmatic lens of risk reward, not an ideological lens that I have tried to assess a plan before us. And I conclude that portions of the Commonwealth's plan are fraught with peril. It proposes to do something never tried before in the history of public education. Privatization of central management as well as the operation of 45 schools by the same company with the seven-year contract for hundreds of millions of dollars. And Then there is a concept that gives so-called community partners a percent of school budgets. Why don't we use that money and plow it back in the classrooms so the 41 11/8/01 - EDUCATION - RES. 010642 teachers have adequate supplies. (Applause.)

The Commonwealth of Pennsylvania is banking on a small, still-yet-to-be-profitable company to run a school system whose budget is three times larger than its revenues. It's like a MOUSE trying to swallow an elephant. Edison is bing asked to operate in a City it has never operated in to do something it has never done, manage a large system. And There's a difference between operating a system and running a handful of schools. It's a difference between playing a fiddle and conducting an orchestra. (Applause.)

On Wall Street, this would be known AS investing in a very aggressive growth fund, but with no diversification. And We're not talking about private money, but taxpayers' money. We're not talking about shaping widgets, but shaping lives. Edison is now managing Chester Upland, but that entire is system is less than half the size of one of our ten academic areas. And they are not managing the business services as is proposed here. 42 11/8/01 - EDUCATION - RES. 010642 Let me quote from a proponent of privatization who wrote, "Given theoretical, practical, and political considerations, we believe that a successful strategy of privatization must be scaled back to present a modest and credibility challenge to the school system which can be expanded in a responsible fashion once positive results are demonstrated." Under the guise of reform, the proposal asks us to dive into the rough and turbulent seas without any swimming test. If it fails, are there lifeboats for our students? I can tell you that I do not believe that there is a responsible business leader in this City who would out-source the heart and soul of his or her business to a company without a request for a proposal or a competitive bidding process or vigorous due diligence to see how it has performed in comparable assignments. Let us remember that the very essence of a publicly traded private sector company is that it must meet the expectations of its shareholders. They become the focus. Edison can do great in this City, but stub its toe in another City, even through 43 11/8/01 - EDUCATION - RES. 010642 no fault of its own, and I can assure you because I've been there, that when its earnings do not meet the projections of Wall Street, it will be forced to make cutbacks even in the areas or cities that it is succeeding in. And one fatal strategic mis-turn can impact a company and its employee for years. I'm sure Councilman Rizzo can vouch for that. He worked at PECO and the leadership of that company made the wrong bet on the Limerick Nuclear Plant. It saddled that company with high cost for decades to the detriment of all its customers and surely its thousands employees who lost their jobs. As I said on Monday the graveyard of American business is filled with companies who have Bit off more than they can chew. In this case, we have a relatively new company in a new market with a new line of business seeking to run a district that is 70 times larger than the average school district in Pennsylvania. Where have that run a transportation system as large as ours or food services or security? (Applause.)

More importantly, where have they run a public comprehensive urban high 44 11/8/01 - EDUCATION - RES. 010642 school, yet alone comprehensive high schools? (Applause.)

Or Early childhood and 5 head start programs? And as for the reward, where 6 is that? I'm not talking about reward for the 7 shareholders or top executives, but for students. 8 Yes, they promise a sizable increase in test scores, 9 but not this year or next year or the year after 10 that or even the year after that or the after that, 11 but in five to seven years, Long after the current 12 decision-makers are out of office and not 13 accountable. I calculated I'll be 63 years old. 14 How old will you be when the ship is scheduled to 15 come into port? 16 I have respect for Mr. Whittle as an 17 entrepreneur. He has added to the public discourse 18 about education. I like Gene Wayde; he is a 19 gentleman, he is fair. I believe that they are 20 genuine in their beliefs. But we must remember that 21 we are not investors. We are fiduciaries for the 22 educational of well-being as 200,000 children. (Applause.)

The only rationale that I hear for this plan is this: Things in 45 11/8/01 - EDUCATION - RES. 010642 Philadelphia are so bad, how can this plan be worse than what's here? So much for high expectations. I would like to pose a different question: Do we have the courage to put our political and philosophical differences aside? Let us not confuse political might with doing what is right. We have an unprecedented opportunity in this City right now. People on all sides are ready for and acknowledged the need for change. Governors Ridge and Schweiker and members of their administration deserve credit for cannalling us with different concepts. Mayor Street and our Board deserve credit for recognizing the need for significant change. Now is time for us to sit down and talk and listen to each other. I believe we can craft a plan that compares us, not to the worst, but to the best in us. Thank you. (Applause.)

Thank you, Mr. Goldsmith. Are there any questions for this witness? Councilman goode.

Afternoon 46 11/8/01 - EDUCATION - RES. 010642 Mr. Goldsmith.

How are you?

I think you're exactly right that the mayor and the School Board and you as CEO deserve a lot of credit for what's happened over the last year. But I want to ask some very direct questions about a few issues I think that you were very qualified to answer. The first being, what did you actually expect to come from the Memorandum of Understanding between the Governor and the Mayor.

Well, I'm not sure I'm the one to answer that since I didn't enter into that agreement. But I would say that I think we all believed that one of the things we wanted was stability for this system. I can --

I'm asking specifically what did you expect to come, not what I wanted.

I'm not sure what I expected from the Governor's Office. I expected a plan that we would have the opportunity to discuss with them as the Memorandum of Understanding set forth that we would then be able to have good 47 11/8/01 - EDUCATION - RES. 010642 discussions and come up with a plan that we all felt comfortable with and we thought would be a genuine partnership between the City and the Commonwealth .

But you were having a discussion with Republicans, and the Republican plan nationwide is very clear. Had the republicans one New Jersey, they'd be implemented a plan there. So I'm asking seriously, didn't you expect that there was not going to be a, what we would consider, a progressive approach to education, it was not going to be the type of local control, isn't that what you expected?

No, I expected a process, I think more than a plan, a process that would really recognize that -- as I've said before, I think the only way that public education can work is if there's a genuine partnership between the people of Philadelphia and the Commonwealth. So I was expecting a process which is still ongoing that we could shape a plan that we all felt comfortable with, recognizing that they are the major funder for the school system.

My second question is, when you were appointed CEO, which I still 48 11/8/01 - EDUCATION - RES. 010642 believe was a great I appointment, part of what was heralded in terms of your record is your experience in business community. What role do you think the business community should play in public education?

More than they are.

Lastly, I would say that how do you think the business community --

I would like to have seen the business community reach out more, frankly. But I think they felt turned off by public education. And I think whoever runs this system, we have to reengage the business community as well as other major stakeholders.

And my last question really is where do you think the business community stands on this issue right now.

I don't know.

Thank you, Madam Chair.

Councilwoman Brown.

You mentioned that your hope was that there would have been some form of process. Can you share with us 49 11/8/01 - EDUCATION - RES. 010642 what level of dialog, meetings, and/or discussions you had with representatives of Edison in preparation for this report.

Well, we've had -- as I said, I generally like the people of Edison. I think what they've done is interesting and it's a novel and interesting business concept. I've had some conversations. I don't want it to be said that we've had none. I had hoped that, frankly, there would have been more dialogue, more, you know, let's sit down and really give us your true sense of what's going on and what you think the problems are and so forth. I will say that we took it upon ourselves to call them and ask them if we could come up to New York to visit their headquarters to see what they do, how they go about doing it and so forth. I would have had hoped that they had shown a little bit more inquisitiveness about what we were doing and so forth. Now, they did talk to a lot of people within the organization, but I think sometimes it's helpful and important to have sort of a businessperson to businessperson conversation and 50 11/8/01 - EDUCATION - RES. 010642 dialogue. And I think if that had been done, that we could have helped make the report more credible and make sure that there were no misstated assumptions and things like that. So, you know, I'm disappointed we didn't have more of an opportunity to be with them.

Finally, did those meetings include Members of the Board?

Not that I'm aware of. The meetings that I had -- actually, Mr. Robinson and I did have a dinner meeting with members of Edison.

Thank you, Mr. Goldsmith. Thank you, Madam Chair.

I Just want to recognize that we've also been joined by Councilwoman Marian Tasco. We have Councilman Rizzo, State Representative Meyers, and then Councilman Ortiz.

Thank you, Madam Chair. Mr. Goldsmith, I understand from your comments here today that you never actually had an 51 11/8/01 - EDUCATION - RES. 010642 official meeting other than a dinner meeting with Edison?

No, that's not true. We've had meetings with them. Our approach was whatever they wanted, we were going to give them. We were going to give them all the facts that we had. I believe that we did that. They had many meetings with, you know, some of our folks. I don't think that Mr. Whittle and Mr. Wade and I had probably as many conversations that the three of us would like to have had.

Again, just for the record, were you ever requested to have an official meeting, interview? Did you have an opportunity to express your personal position at all to Edison, you?

Privately, no. 19

You've listed many of the accomplishments that -- and you believe they're accomplishments and changes. And I think it was impressive to see how you've changed the payroll department around and the hundred thousand dollars, I believe you said, that's been already saved and in that one particular operation. 52 11/8/01 - EDUCATION - RES. 010642 Could you please tell me, based on the information that you have about Edison and about the way they run schools, can you tell me if you looked at the list of thing that is Edison plans to do, can you do the same things? Is there any obstacles that you would have implementing the Edison plan?

I do not believe that there is any obstacles to doing it. The only obstacles that we have right now is we're under the gun and we don't have the time nor the money that we would like. But in terms of processes and knowhow and so forth, I think -- again, I say this respectfully, a lot of the people that Edison has on board and will have on board come from public school systems. Some of them come from our system. So I do not believe that there's anything that I've seen that couldn't be done. There's not a better mousetrap out there. They have a philosophy of operating.

With your leadership and, again, the list of things you mentioned today, do you believe that the School District is on track, with additional funding, to have the reforms, to have -- to make the changes that we want to realize 53 11/8/01 - EDUCATION - RES. 010642 here in the City of Philadelphia?

Well, I think we're on track. As I said, I don't want to overstate what we've done. There's a lot more that needs to be done. I think that we've made progress. I think, you know, we haven't done anything fancy. This is Management 101. I think we're on the right track. If we're all the same page, we can do a lot more a lot quicker.

My last -- because there's a lot of people who would like to get to you. My last question is, the accomplishment -- you said that you made a lot of these changes and improvements quietly. Do you think that was a good strategy? Is the Schweiker Administration right now aware of the changes? The fact that you never had an opportunity to sit down with Edison and tell them what you've done, possibly that was maybe not a good strategy?

Well, I know the Mayor got upset every once in a while because his phone wasn't ringing off the hook so he didn't think we were doing anything. I come from a background, 54 11/8/01 - EDUCATION - RES. 010642 that's the way you get things done. You try not to create problems for your boss. I don't know. I think that the Commonwealth knows what we've done and what we haven't done and so forth.

They officially know of all the changes?

I think so. We've communicated with them. I'm not sure they know everything. And my Board probably doesn't know everything because we just go about doing things.

But just to follow up on that, it's difficult when you say you're running out of time, you're running out of money, it's real difficult for me to, if I were in your position, not to let people know that have the gun to your head that maybe things have changed and maybe things have gotten better and you really don't need to have this approach. Or, again, we're going to back to the rationale that this is already a done deal and all the good things that you've done, all the things that you could have told them wouldn't change a thing. Is that your impression?

I think when we met with 55 11/8/01 - EDUCATION - RES. 010642 Governor Ridge back in early August, I believe it was, we told him what we were up against and how difficult it is to, you know, RUN system if you don't have stability and how difficult it is to keep morale up. But Let me say, the things that have been have been done by numbers of people in the district. And I feel really uncomfortable. I'm just reciting what has been done by a number of people. But I don't think that we have to go -- and my point is saying that you don't have to privatize to do things the right way. I think that's just a misnomer. And to me, that's a philosophical approach, it's not a business approach. We can do it the way we're doing it and just get the right people in place and, as I said, give them the authority and so forth. It can be done. I truly believe that. Now, what we can't do is we can't eliminate poverty. I was at the McClure School the other day at Sixth and Hunting Park. It's 60 percent Latino, 40 percent African-American, Caucasian principal. Great principal, she's doing the right thing. She's making the right trade-offs. The kids were great; they came up, they hugged her. 56 11/8/01 - EDUCATION - RES. 010642 She was doing all the right things. They even have new computers there. But When I left there, I said to myself, when those kids go home there's a good chance they don't have computers es in their home. That's something that I can't change and Edison can't change, but hopefully as a society some day we will be able to change.

Thank you. Thank you, Madam Chair. (Applause.)

We know this is a topic that most of us could just sit and ask questions and make comments and get information all day, we want to get to Edison, too, and they're here. We want to get to them. We sent for the timer. As soon as it gets here, we're going to use it. In the meantime, we'll figure it out and let you know when your time is up. REPRESENTATIVE MEYERS: I really have a basic question that relates to this notion that people are just throwing their hands up in the air saying, "It's a done deal." What would you advise the Board, City 57 11/8/01 - EDUCATION - RES. 010642 Council, the parents, the unions, legislature, what would you suggest ought to be our recourse and remedy to stop this hostile takeover? What sort of strategies and tactics would you advise one should involve themselves in? Or is it pretty much at a point where even if you were doing all of that that we wanted you to do, you still don't have no idea of how we could stop this hostile takeover?

Well, you're asking me a question I feel very uncomfortable answering. I'm a manager, I'm not a political strategist and I don't really want to get into that fray. I do believe that -- I believe that reason will ultimately prevail here. And I go back to the belief that I think everyone will come to the conclusion that we cannot do this by ourselves and the State cannot come in here without the support and the cooperation of the City. I think those are just two very basic facts. (Applause.)

And frankly, I don't think Edison would want to come in under those circumstances, but they can obviously talk for themselves. 58 11/8/01 - EDUCATION - RES. 010642 REPRESENTATIVE MEYERS: So pretty much you're thinking is that the Republicans and the for-profiteers at some point are going to adhere to the agreement that there's going to be some dialogue and they're not going to continue down this road of, We just lied to ya'll and decided we ain't going to have no dialogue with ya'll, we're just going to do what we want to do. You think they're pretty much going to go off of that and now agree to have some dialog.

That's what I hope for. I think that's what we all hope for. REPRESENTATIVE MEYERS: I just want to ask one other question. This is something interesting that you said when you had talked about your business and corporate experience. Because, actually, I believe what's happening with Edison and Philadelphia is really a war that's being waged by corporate American to take over the education system. And I think Edison is one of their commando teams that they're sending out into these cities to shoot the first shot across the bow. From your experience in the boardroom from the corporate sector, do you believe there's a 59 11/8/01 - EDUCATION - RES. 010642 possibility that there is a national move that's being created through corporate America and that these types of tactic solutions are being manifested through discussions through their think tanks like the Heritage Foundation and other groups like that? If that's the case, what would you, from your corporate experience, suggest that we do.

I think everyone in this country, including business, is very concerned about the educational system. We have to be. I believe that the business community is concerned about its shareholders. That's what they're in business for; I don't know that. I think Edison is concerned about its shareholders, and I think that's probably more important than any, you know, getting involved in the battle ground that's going to bog everyone down.

But no suggestions or remedies?

I think what you're doing now is trying to get the facts out, and hearing from various parties is the best thing at this point in time.

All right. Thank you. 60 11/8/01 - EDUCATION - RES. 010642

Councilman Ortiz.

Thank you, Madam Chair. Mr. Goldsmith, I'd like to refer you to Governor Schweiker's statement which was incredible and insulting. He says the children of Philadelphia have waited too long already. As the report of the Edison school makes clear, the children has been failed for far too long. And No problem with that. That our children have been failed. The question is, by whom? And then he says in the third page of his statement -- and I'd like you to respond to this because I do believe that some progress has been made in different schools and I think the School Board has begun a process. And Hornbeck with all his problems that have been articulated, children achieving was making inroads into education and educational progress. He says, "The conclusion is inescapable." And as the chief executive, I'd like you to answer this. "The Philadelphia School District does not have the ability to right itself. It does not have the senior leadership, the 61 11/8/01 - EDUCATION - RES. 010642 technical capacity, nor the organizational culture to mobilize and energetically behind a bold new effort to improve education dramatically, while simultaneously making the hard decisions that is will be necessary to right its fiscal affairs." Can you react to that statement for me and characterize it in perhaps detail? Although you have done it and some of it has been done in your opening statements. First, in terms of -- is he correct? Because that is the excuse to the takeover and the imposition of outside rule.

Well, I think to the extent that that is correct, it's become a self-fulfilling prophecy that the Commonwealth has helped contribute to. I will tell you someone that used to be in the recruiting business, it's very difficult to recruit people to a company or to a School District where it has enormous financial needs and is liable to be taken over or whatever. And To the extent that we have been denied the funds that we need and have been put in this position, of course it's more difficult to hire the type of talent that you need. Is it impossible? Of course not. All you have to do, as I say, let people know 62 11/8/01 - EDUCATION - RES. 010642 that help us resuscitate ourselves and keep us kicking and we can get the, you know, the right people to do that. Like any organization in this day and age, it needs some cultural change. Every industry or anyone in the public sector, you know, there's liable to be a feeling of entitlement. But the world has changed. And I don't care where you're ear working, whether it's at the School District or General Motors or whatever, it's a competitive environment right now. And I think we have to change that, and I think we started that process. But change does not happen overnight, and it won't happen overnight even if Edison is here. It will take a while.

On of the 10 point that Governor Schweiker put forward, it talks about the aggressively seeking of budget efficiencies over $225 million in annual cost reductions by 204, 205. Could you react to that and tell me what has been the process in terms of your own cost reduction and the possibility and the impact of the cost reduction as outlined here and do they detail it, do you have any understanding as to 63 11/8/01 - EDUCATION - RES. 010642 what this means?

I would like, if I'd be able to call our chief financial officer, Rhonda Chatzkel who has more knowledge about that.

Good afternoon. My name is Rhonda Chatzkel, C-h-a-t-z-k-e-l, CFO of School District. Councilman Ortiz's question about the magnitude of the cuts that is have been proposed, We really have not had an opportunity to examine them. We had a productive, I think, productive meeting this week where we posed a lot of questions and I think that some of the assumptions on which these savings were base were questioned.

What are those assumptions?

I don't know all the assumptions. To be honest, there are a number of potential cost savings there and we really only had an opportunity to review a few of them.

Do you have any -- you yourself during the last few years have been going through cost-cutting. I think Judge Smith had a steady study in which even she brought the private sector in to study what it is, what efficiencies 64 11/8/01 - EDUCATION - RES. 010642 could be put in and done. Could you detail to us at this point in time what have been the cost-cutting measures that is have been taken? What, if any, have they had on the educational process and what more can be done without impacting on cutting of basic educational programs?

Let me start by saying that -- and I think Edison in its report and in subsequent conversations as acknowledged this. The School District is extraordinarily complicated, and the cost-cutting measured that we began to implement over the past year are ones that our staff generated, are culled from reports that have been written about the school district, and there have been many: The Price Waterhouse report, the productivity study that commissioned by Greater Philadelphia First, the report by the City Controller, and we called from each of those reports the best ideas that we could. But that being said, I think there is a recognition that was stated here this afternoon that educationally we do not have the resources that other school districts have across the Commonwealth. The State commissioned a report by Standard and Poors which was released in October, 65 11/8/01 - EDUCATION - RES. 010642 which showed that when you factor in student circumstances for us and you factor in the cost of living, we spent percent less than the average 5 school district across the Commonwealth. 6 In Edison's own report, when they 7 compared us to other districts, and I think they 8 picked Las Vegas and Fort Lauderdale, I don't recall 9 the third, I think it was in Texas, but the report 10 cited that we actually spend more than those 11 districts when you factor in cost of living. We 12 spend less than those districts on a per student 13 basis and have a higher poverty level. 14 That being said, what we felt what had 15 to do was to focus our cost-cutting efforts outside 16 of the classroom and reallocate as many dollars as 17 we could into the classroom. The most significant 18 cut, and this is one I credit Phil Goldsmith and Dr. 19 Farmbry with, was to do a major re-engineering of 20 our academic organization. And in that process 21 which had very intensive internal scrutiny and 22 discussion with the Board, approximately $14 million 23 was saved this year and that will increase to over 24 $20 million on an annual basis over the next four years. More to the point or equal with that, 110 66 11/8/01 - EDUCATION - RES. 010642 employees were returned to school base positions, which was one of the key initiatives that I think was part of this plan. We have also -- while the Edison report has been in draft stages and, again, it would be very helpful to discussion with them what ideas they can bring to us in terms of best practices of other school districts. We've already continued to identify other measures, again focusing outside of the classroom or to get better mileage out of the dollars we spend in the classroom. And You'll recall that when we came to Council late in the spring, we talked about $276 million in cuts that we felt we could realize over five years. We believe that number is now more like $350 million. Based on the cuts that we have already begin to put in place, we believe that $265 million of those cuts are already factored in. Some of the other cuts will require legislative change, and we've mentioned that in prior meetings before council.

I do want to make a clarification. I do want it to be misinterpreted. When Ms. Chatzkel said that we haven't gotten to looking at those numbers, it's not because we 67 11/8/01 - EDUCATION - RES. 010642 haven't wanted to, it's because we have not yet received some of the underlying documents that would help us to really determine how their projections of those savings are calculated. So we think we'll get those numbers, and we look forward to sitting down with Edison to really get underneath the covers here and see how they got to their numbers.

I've been told that my time is up. But I just want to begin perhaps that as we continue in the questioning, we put a record out that we are able to ascertain what progress has been done in the terms of cost savings, given within the limits that we have and also the progress that had been made, because we all want change. We're not for the status quo. But It is in what way, in what manner, and under what system?

Last question, Councilman Ortiz. You've used your time.

No, that's it. You said my time is up. I'll come back later.

Thank you.

Thank you.

Thank you, Mr. Goldsmith. 68 11/8/01 - EDUCATION - RES. 010642

Thank you.

You know, certainly, this is a discussion that we all want to continue to have, and at some point we will. REPRESENTATIVE WASHINGTON: Our next person to testify is Mr. Chris Whittle, president and CEO of Edison School. He has an entourage, I think that's going to do a presentation. Mr. Whittle, we ask that you speak into the mike and that you identify everyone seated with you, and if they have difficult names, if they would spell their names. Thank you.

I was going to introduce them as we go. Is that okay? REPRESENTATIVE WASHINGTON: No we want you to introduce them before you begin.

So we know who's at the table.

This is Deborah McGriff, Dr. Deborah McGriff, Rev. Floyd Flake, Chris Surf, Adam Tucker, Vanelle Middleton, Gene Wayde, David Graff, John Chubb, Tom Stewart, and Steve Tracey and Theresa Morrison. REPRESENTATIVE WASHINGTON: Thank you. 69 11/8/01 - EDUCATION - RES. 010642

My name is Chris Whittle. I'm chief executive officer and founder. REPRESENTATIVE WASHINGTON: You need to speak into both mikes. One is for the cable.

I'm CEO and the founder of Edison Schools and I'd like to start by thanking the City Council, Committee on Education. Chairperson Miller, thank you very much for having us and for providing the ground rules for this. I'd also like to thank the school board for being here and Members of the Black Legislative Caucus as well. We appreciate your time. And we think it is very important that we answer any questions that you may have. And the reason there's so many of us is we'd like to be able to do that well and in detail as we go through the afternoon. There are three things I'd like to do to begin. The first is I'd like to tell you a bit about Edison. I won't spend much time on that because I think there's a good bit known about it here. More importantly, I'd like to introduce those of us that are here today. And the reason I'd like to do that is we think it's important that you know who we are and that you know our commitment to 70 11/8/01 - EDUCATION - RES. 010642 public education. Another reason I think it's important is in many of the opening comments, the question of capacity has been raised, and I'd like you to sense the capacity of this organization. A little bit about Edison. This company was conceived in 1988. Its mission is to help cities, states, citizen groups build great public schools all across the United States and, by the way, only public schools. Many people think we run private schools. We don't run private schools; we operate only public schools. Today we operate 136 public schools across the country. We're in 50 cities, including most major ones. We're in states. This morning, 16 75,000 children showed up on the doorsteps of our 17 schools across the country. If you think of us as a 18 school system, there are 15,000 school systems in 19 the United States; Edison is the 45th largest school 20 system in America and the fastest growing. 21 81 percent of our children are children of color, 22 70 percent receive Title aid, approximately 23 10 percent or north of 8,000 of our children are 24 special education. Those demographics are very 25 similar to those that you have here in Philadelphia. 71 1 11/8/01 - EDUCATION - RES. 010642 We've invested heavily in these 13 years. We've spent over $500 billion building this organization in the capacity and the systems that we're going to talk a little bit about today. The most important thing that I you want to share with you is the thing that we think is most important; and that is, how are our students are doing. Something that I think is misunderstood about Edison is that the most important measure at Edison is not earning, it is learning. And The reason is, everyone at this table knows the following things: If our students are not doing well, we will never succeed as an organization, and it's the first thing that we report on at every board meeting we have. We have a public board meeting next week. The first thing we talk about is how are our students succeeding. And I'd like to tell you about that. If you look at all of our schools over the pass several years, you will find two things: You will find on norm reference test our children are advancing at about 5 points a year. On criterion reference test, they're advancing at about 6 points as year. I urge you to compare that to any major urban school system in the United States, and 72 11/8/01 - EDUCATION - RES. 010642 What you will see is gain rates by those students of anywhere from to times the gain rates that you 4 see in most urban systems. It's something that 5 we're immensely proud of. 6 I want to quickly say we're not perfect, 7 and I'm sure you'll hear that today. 84 percent of 8 our schools are up in terms of student achievement 9 since when we began with them. 16 percent are flat 10 or down. And By the way, we think of flat as being down. Meaning, if we're flat we're not doing what we're supposed to be doing. We're supposed to be going up with children.

We work for 62 different public entities across the United States. And we are accountable to those public organizations. And those public organizations are school boards for the most part, states, charter boards, any type of public entity that we work for. One of things that we would also urge you to measure is, are those people satisfied? Since the day we began actually operating the schools, which was eight years ago, we have signed 65 contracts, 62 of those, 62 of 65 are in place today. We have loss three, and you will hear about those in great detail, I'm sure. 73 11/8/01 - EDUCATION - RES. 010642 The most important thing that I will kind of close with is the commitment of these people with me today and of the 7,000 members of the Edison team across the United States . There are of us 6 here today. It represents, just this group that we 7 have here today, about one-third of our senior 8 management. And by the way, we also asked a 9 principal and a teacher from our schools to be here 10 in the event that you'd like to address questions to 11 them. I'd like to introduce each and then I'm going 12 ask each to take 30 seconds and simply tell you why 13 they're a part of this organization. One thing you'll note, everyone that's here, and they were not handpicked for this reason, but every one of them with the exception of me is an educator and most have been public educators. Virtually all of them have been or are teachers and teachers in public schools. I'll start with a quick introduction of me other than what I just do at Edison. I grew up in a small town in Tennessee. I'm a product of public schools. Every day except the one week that I went to Columbia Law School has been in a public school. My dad was president of 74 11/8/01 - EDUCATION - RES. 010642 the public school board in the small town where I was. The first years of my career from '70s to 4 the early '90s were in media. I enjoyed a very 5 interesting 20 years. I was publisher of Esquire 6 and founded the first news system that's in 12,000 7 schools across the United States. 8 You ask why am I doing this. I've 9 dedicated the last 13 years of my life -- most of 10 the people that you're going to hear from today, 11 have dedicated their entire lives to public 12 education. But Why did I take testimony last 13? 13 We have many great public schools in the 14 United States . There are great public schools here 15 in Philadelphia, but we also have thousands upon 16 thousands in which perhaps 10 million children are 17 being educated or not educated. That is a tragic 18 state for the United States. And When I was in my 19 early 40s, I said what do I want to do with the last 20 half of my career? And I said that's something to work on. And The idea that is represented here and that has brought all of us here is to make as many public schools in the United States as we can great. And that's what we hope you will judge us on is are we doing that, Not in one school, but in 136 75 11/8/01 - EDUCATION - RES. 010642 schools. Look at that track record of achievement because that's what we are all about and it is the idea bigger than all of us here that drew us here. So enough on me. Let me introduce you to the team. Dr. Thomas Stewart. He taught at Harvard, and he is a cofounder of a residential charter school. He's part of our Philadelphia team. He's been working with community groups here. He was part of Learn Now which merged with Edison several months ago, and he is a committed member. And, Tom, talk to us about why you're doing this.

Good afternoon to all the public officials, the citizens of Philadelphia, and Particularly the parents and guardians in the room who are here for a very important reason. I'm affiliated with Edison as senior. I am senior vice president of development at Edison Schools. There are a couple reasons why Edison is important to me and why I am a member of the organization that are borne out of both personal and professional experiences. I'm very proud to tell you that I'm born raised in Washington, D.C. I'm pride to tell you 76 11/8/01 - EDUCATION - RES. 010642 that I spent a few years of my life in what was called the D.C. Junior Village; I was an orphan for several years. I'm proud to tell you that I'm a product of the D.C. Public School System. I went to the U.S. Army after coming out of high school, 82nd Airborne. Left and went back to my alma mater, the University of District of Columbia. I am humbled to tell you that I have Ph.D. specifically from Harvard University which I received in government. I am very upset to tell you that despite my personal experiences and my Harvard accomplishments, I came out of high school reading and writing at the ninth grade level. I discovered that at the age of 24. Professionally, I wrote my dissertation on prisons. There are few people in the country that have seen prisons the way I have. I spent three years traveling in and out of the prisons in the U.S., which were disproportionately African-American and Latino and increasingly woman of color. When I graduated and finished my dissertation at Harvard in 1994, I received a very prestigious fellowship that gave me a lot of money and three years to do anything I wanted. I shifted focus at that time to public education, working with 77 11/8/01 - EDUCATION - RES. 010642 parents in the public school system. I also befriended shortly before then a gentleman by the name of Eugene Wayde who was in law school and several other African-American and Latino students from very humble beginnings. We attempted to form an organization with many of the objectives of Edison Schools that we called 21st Century Work. The only difference that it was a not-for-profit organization which we quickly discovered that not-for-profit aren't designed to build and facilitate million-dollar organization that have a national scope. I left Harvard in '96 and went back to my alma mater as a professor, the University of the District of Columbia. While there, I discovered something called charter schools and co-founded one of the first urban residential charter schools in America. It's called the Seeds School. In Our first two years, we raised roughly $20 million. I'm proud to tell you that Bill Gates adopted the school about two years. Despite the successes of the Seeds School, I relished an opportunity to rekindle my relationship with Eugene Wayde who went to Warden and took the 21st Century not-for-profit concept and 78 11/8/01 - EDUCATION - RES. 010642 converted into where we are now. The beautiful thing about the concept for me was that it provided us an opportunity to serve more than a handful of children to Washington, D.C. It will allow us an opportunity to serve children all across America, particularly from low-income backgrounds. Learn Now, a couple months ago, merged with Edison Schools. And as part of that merger, we'd like to think that we're going to make Edison stronger, wiser, and we will ensure that it not only extends its services to low-income children, but it will provide a quality service to those students. The last thing I would like to say, despite the politics and a lot of the other rhetoric that surrounds this very important issue, personally, aside from Edison or anything affiliated with Edison, this is what I do with my life. This was my calling in life, which is to serve children and families, particularly that look like me, that had my experience. Thank you.

Thank you, Tom. The next person I'd like to introduce is Dr. John Chubb. Dr. John Chubb is our chief educational officer at Edison. Everything related to curriculum and 79 11/8/01 - EDUCATION - RES. 010642 instruction in the organization ultimately reports to John. I met John ten years ago. He was at the time one of the most famous writers s on the education scene. His books are required reading in most education classes in the United States, particularly politics, markets, and schools. He was a professor at Princeton and at Stanford and at the time he was working at Brookings in Washington, D.C. I said "John, it's time to take all that you have learned and written about it and put it into action," and he very courageously left Stanford and Brookings and became part of the Edison team. John.

Thank you. And thank you all for the opportunity to be here this afternoon. My reasons for wanting to be right here this afternoon are really very simple, and I will be really quite brief. Over the last ten years at Edison, I had the opportunity to work in over 50 communities around America, from big Cities to modest-size cities to smaller cities and communities. Communities in great need and communities with great 80 11/8/01 - EDUCATION - RES. 010642 hope for their kids. And It's been the great experience of my life to see what those communities have accomplished with some help from us, But very substantially through their own efforts. The reason that I am excited to be here today, very frankly, is this: I'm from this community. My grandfather and grandmother are from Philadelphia. Worked at the refinery underneath Penrose Avenue Bridge. My father did the same. I grew up in Upper Darby, went to high school there. This is where I'm from. And the opportunity to be back here working with this community, as I've had a chance to work with communities around the country, is genuinely, if it comes to pass, a very special thrill.

Vanelle Middletown. Vanelle is a principal of Globe Pierce Middle School. She's also a player coach in that she assists in our other schools in Washington, D.C., which is where Globe Pierce is. If you saw the achievement gains in Globe Pierce, you'd know how talented Vanelle is. She's the graduate of Fisk in my home state of Tennessee. And Vanelle, tell us why your here. 81 11/8/01 - EDUCATION - RES. 010642

I'd like to say good afternoon, and thank you very much for allowing us to be here today. I've been an educator for well over years now. And as a principal, I can tell 6 you that I've been a principal of other schools in 7 other districts, Kansas City, Missouri; St. Louis, 8 Missouri. And surprisingly enough for me, one night 9 very late I was surfing on the Internet and I really 10 wanted to know kind of what was going on in the 11 field of education and charter schools. And I did 12 come across the word "Edison Projects" that time. I 13 put my name in and asked the young man if he would 14 please give me a call back or at least write he 15 back, and the person did write me back. And I 16 applied for the position of principal. I was 17 afforded an opportunity to become principal of 18 Edison after reading about all of the things that 19 they did for children. 20 Now, my parents come from a educational 21 base also. My father was a high school principal. 22 My mother was an elementary school teacher, I'm sure 23 as many of your parents have been. 24 One of the thing I can tell you for me 25 that has been most rewarding as principal is I had 82 11/8/01 - EDUCATION - RES. 010642 never in my life worked for a district that allowed you the freedom to be a principal, the autonomy to be a principal, to be able to exercise your own rights and abilities, to be able to develop a structure in which students could honestly succeed. That's what Edison is about to me, that's what it has been about. We have a very successful school in Washington, D.C. We have 746 students. And we certainly would like for you to come visit us at any point in time. And thank you so very much.

And Vanelle, if you would, could you introduce Theresa?

Theresa Morrison teaches also at the Globe Pierce Academy and she also has been our learning environment coordinator.

Good afternoon. Like my principal said, my name is Theresa Morrison, and I'm a proud Edison teacher as well as a teacher trainer for the company. This is my eighth year in education, my third year with Edison. And I'm at not the number cruncher, I'm not about the staff with the report. I'm here to give you that caveats, the anecdotal information that if it's warranted I'm here to give; to give you kind the inside peek about 83 11/8/01 - EDUCATION - RES. 010642 what Edison school likes like and how it's run, how our teachers are treated as professionals. Not saying that your teachers here in Philadelphia aren't, but with Edison, just the support system is amazing. How perhaps I can call on get on our Internet and contact a colleague that's out in California, get on the Internet and contact a colleague that's in Kansas, one that's in perhaps Texas, because our curriculum is aligned and it's the same, I'm able to build a support system that I can go to and call upon. And Because our teachers are supported, because we provide the training, another fabulous thing which is the teachers is that we get to go to conferences, national conferences because our schools are all over the country. We get a chance to come together, to meet, to talk about what's going on in the schools, what's working, what's not working, what we can do to help approve our student achievement. So once our teachers feel empowered, it automatically trickles down to the students and we're automatically successful in dealing with student achievement. So I'm very proud to be here.

Thank you, Theresa. 84 11/8/01 - EDUCATION - RES. 010642 David Graff is Edison's general counsel. He's a native of Pennsylvania. He grew up in Pittsburgh, graduated from Brown in Georgetown. From there, he worked for the civil rights division of U.S. Department of Justice and also the D.C. Public Defender, and he's great general counsel for us. Dave.

Good afternoon, and thank you for the opportunity to respond. I'll be characteristically brief for a lawyer. I just want say two things. First, as Chris indicated, I did grow up in a small town out of Pittsburgh. Pennsylvania is my home state, and the state of education in Pennsylvania is of particular importance to me. Second, with respect to the reason that I enjoy working at Edison, I think that it can best be summarize by saying this: And I think that that is that any African-American or any minority person who is fortunate enough to have an opportunity to attend a institution like Brown University or Georgetown Law Center, like I was, feels a certain sense of accomplishment and guilt. And The 85 11/8/01 - EDUCATION - RES. 010642 accomplishment is obvious because you're at an institution that is generally widely respected. But the guilt is because you look around and you see that you are one of few minority students there, and that cannot help but eat at you for all the years you are there. I'm extraordinarily proud to be at Edison because I see my role at Edison as general counsel and as a senior vice president of the company to help other children, specifically African-American and minority children, achieve the same level of educational excellence that I have achieved or get the same opportunities that I was lucky enough to get. And I see Edison as an opportunity as leveraging best practices from the private sector and public sector and working towards that goal. This is a personal conviction of mine. It is what I want to do with my life. It is what I want to do with my law degree. And I'm very proud to be here as part of Edison today.

Thank you, Dave. Adam Tucker is new to Edison. He's our head of communications. He's not new to the press corps here in Philadelphia. He's been working 86 11/8/01 - EDUCATION - RES. 010642 closely. He was a high school teacher for five years. He's graduate of Brown University. I didn't know that the two of you were there at the same time. While at Brown he joined something called the Coalition of Essential Schools, which many of you know there are many within that coalition here in Philadelphia. And he was also with Children Now. Adam

Good afternoon and thank you. For me it's very simple and it's very personal. I think I had my professional peak between the ages of and 26, And that's when I was 17 a high school teacher. I thought subjects that I 18 had never taken. I taught huge enormous classes of 19 kids. I met families. And It really transformed me 20 as a person. And I'd liked to think I helped 21 transform the kids that I worked with. Being at Edison affords me the opportunity to help create those opportunities for others. And I had a whole lot more fun teaching high school than I do working for Edison, honestly. 87 11/8/01 - EDUCATION - RES. 010642 But I feel like this is important work, it's exciting work, and it's something that each and every person that I come across, no matter what side of the table we're on, is about, which is about young people. For me, that's why I'm here. That's why I chose to work for Edison. Fortunately, I could be in a lot of different places because I was afforded those opportunities, but I choose to work for Edison because I know what this company is doing and can do, and look forward to doing that in other places as well. So Thank you for letting us be here.

Dr. Steve Tracey on is the only person on our team that's worked in the Philadelphia Public Schools, meaning at this particular table. I won't them when, Steve. He's a graduate of Princeton and Harvard. He's part of the Philadelphia team that's been working here for several months and he lived here many years ago and he was superintendent of schools in New Milford, Connecticut when he joined.

Thank you. Madam Chairperson, public officials, and members of the Philadelphia community, I am a life long public 88 11/8/01 - EDUCATION - RES. 010642 school person. I grew up in the public schools. I've taught in the public schools, as my mother and grandmother had before me. It was about 30 years ago that I began my public school career right here in the School District of Philadelphia. And I choose that career because I thought that public schools offered the best hope for liberating future generations from the burdens of ignorance and poverty. After some years of service as a 12 teacher and administrator in the traditional public 13 school system, I became convinced that if we really 14 wanted to deliver on that promise of public 15 education, that we had to find new strategies and 16 fresh approaches, specifically, ones that is would 17 hold fast to the values of public education and 18 equal opportunity, but also embrace the spirit of 19 investment, innovation, and accountability that are 20 going to be critical, I believe, if our students are 21 going to reach the levels of achievement that we all 22 want them to reach. 23 Edison Schools offered me the 24 opportunity to do exactly that about eight years ago. I was proud to be involved in the launching of 89 11/8/01 - EDUCATION - RES. 010642 one of our first four schools back in 1995 and proud to be a member of this team ever since. Thank you.

Gene Wayde. Gene is somebody, I think, most of you already know. He's head of Philadelphia team at Edison. He's a great entrepreneur. He founded Learn Now, which we viewed as the up-and-coming company in the world that we live in. I wish I had his academic pedigree. He's a graduate of Morehouse, of Harvard and of Wharton. Before that, he was with an educational reform organization in Boston called the Efficacy Institute.

Madam Chairperson, public officials, community members, just quickly, I grew up in a housing project in Boston, Massachusetts, and came face-to-face with what I call the culture of underachievement in our communities. Sometime between high school and college, I was in a program that a group of folks put together to a help a group of kids who were struggling out of high school. Went from the bottom of my high school class and top of my college class and decided to go back and spend my adult life on working on achievement, how do we build institutions 90 11/8/01 - EDUCATION - RES. 010642 to prepare our kids for this world? Because many of the children that I grew up with were poor successful, were like me, succeeding despite the fact that they were in public schools, not because; because we had someone who looked out for us on the side, but not because the institutions were preparing us in large numbers. I got together with a group of my friends in law school. We tried to put together a non-profit to do what we're doing now, and we realized about six months into it that no one was going to give us a million dollars to build schools in the South Bronx or in the south side of Chicago or North Philly as a non-profit, that we couldn't bring the resources to our community that our kids deserve. I had grown up on the other side of a lot of underfunded well-meaning programs where people came through and built programs and were wonderful consultants, but we were still in the same condition we were in in the housing project that I grew up in. So I decided that building institutions was going to be the answer. And That's why I spent the last 12 years of my life doing. We built a company called Learn Now and grew that company out. We actually 91 11/8/01 - EDUCATION - RES. 010642 have a charter school here in North Philadelphia. Four months ago we merged that company with Edison Schools. And let me tell you why briefly. Many of you heard about the activities in Chester where the Chester Upland School District was managed by a couple of private companies. Our was one, Edison was the other. We really didn't know much about Edison other than what we read. In the course of working with them to the team at Edison, many of the people at this table here in the course of working with them in Chester, we realized that these are people who harbor many of the same values that we do, that are trying to accomplish the same things that we were. We both were out looking at best practices. Oddly enough, our curricula were a lot alike. Neither one of us invented them. These were curricula that were just best practice curricula that we decided to employ in our schools. And realize that these are people that I could spend the remaining part of my professional career working with because we're trying to accomplish the same things. That's why I'm here today. Thank you.

Chris Surf is our chief operating officer. He taught high school for five 92 11/8/01 - EDUCATION - RES. 010642 years. He also did a couple of other things along the way. He taught high school for five years. He was associate counsel to President Clinton. He was U.S. Supreme Court law clerk to Sandra Day O'Connor and he works very closely with me. And I can tell you two things about him: It's very easy to be smarter than me, and he is. It's hard to work harder than me, and he does that, too. Chris Surf, our chief operating officer.

Madam Chairman and distinguished public officials, I am very grateful of the opportunity to be here with you today. I am here with Edison for the same reason that I suspect that everybody is in this room today. There is no 16 more important issue in America today than addressing the concerns of our public schools in the United States. I do want to make one thing very clear. It is my very firm belief that there is not a single bad intention in public education today. I've never met anybody who gets up everyday saying "I'm going to try to make a school worse." What I think we can agree on, however, is that despite the best efforts of a lot of very talented people, there are tens of thousands of 93 11/8/01 - EDUCATION - RES. 010642 desperately failing schools in the United States today. I grew up in a household where I was told over and over again as a child, it doesn't matter whether you end up rich or poor, what matters is whether you leave the world a better place. I know how corny that must sound, but I live by that philosophy. And there is nothing more important in this country, in my humble judgment, than to fulfill the basic premise of this country, which is equality of opportunity. Forgive a statement from an old history teacher, and that is, what distinguishes this country from every other country that was ever born is there this notion of equality of opportunity, whether you're talking about Medieval France, Medieval Ethiopia, or Medieval China, for example, you were who your father was. It was that simple. In this country, the idea, as badly as we're succeeding at it, is that everybody has a chance to succeed regardless of everything but talent. Talent is what makes a difference. And when our public education system does not fulfilling its promise, we are not fulfilling the basic premise of United States today. 94 11/8/01 - EDUCATION - RES. 010642 I'm committed to what I do. I take a great deal of flack. I understand that there are many who do not understand what we do. But I hope you will appreciate that what we are attempting to do comes from the best of intentions and we, too, are committed to public education in every sense of the word. Thank you.

One person testified earlier that they were concerned about the capacity of the organization to take on a challenge the size of the Philadelphia public schools. Within Edison we have individuals, to be exact, who have been 14 superintendents of urban school systems across the 15 United States. Manny Rivera who is not with us here today ran the Rochester public schools. Beno Schmidt (ph) who is testifying in front of the Blair government in the United Kingdom about possibly Edison going overseas, ran Yale University for seven years. And Deborah McGriff ran the Detroit public schools. She is one of the senior talents in American public education. At the time that she was there, it was almost exactly the size of the Philadelphia public schools. She's also worked in Cambridge and New York City. She's a graduate of 95 11/8/01 - EDUCATION - RES. 010642 Fordham and she comes from the south like me. Deborah.

Good afternoon, Chair Miller, Chair Washington, Chair Bishop, President Ramos and the friends of public education in Philadelphia. As Chris said, I've spent a long time in public education, over 30 years to be exact. And all of that time has been in large urban school districts. Like my other colleagues, I also spent some time in a non-profit organization working on drop-out prevention programs. My mission as public school educator is to close the achievement gap, whether that gap is racial, social, between urban school districts and suburban school districts or whether it's the international gap between the very best students in America and the students around the world. Edison -- we want to provide urban students with the same schools that a affluent parents want for their children. When I was a central office administrator in New York City, like many people of my age group, I was influence by Ron Edmonds who is known as father of effective schools movement. And Ron said that you could find an 96 11/8/01 - EDUCATION - RES. 010642 effective school for urban school districts, but he never found an effective urban school system. And when I was sent information from Edison in 1993, I looked at the mission of the company, to provide world class education for all children. I looked at the school design. I looked at the accountability system, a accountability system of consequences and incentives. And I decided this was the place that was likely to help build the first large urban school system that's effective for all children. I've been here for eight years. I was the first public school superintendent to join Edison. And I have stayed because the Edison company is committed to public education. Kenneth Clark defined public education as education that's in the public interest. Schools and systems that mis-educate children are not in the public interest. Individuals who will be accountable to delivering the children the level of education that they expect for their own children are systems and companies that are in the public interest. I believe that children in big cities deserve excellent schools. The achievement gap must be closed. When children graduate from urban school systems, they must enter 97 11/8/01 - EDUCATION - RES. 010642 the world of work with the skills necessary get a job that grows into a career. They must enter college with the skills necessary to take college courses, not remedial courses. We must inspire our students to be entrepreneurs so that they can build their own communities and be the people who start the next generation of companies. And finally, we must inspire our young people to a level of civic responsibility so that they will give back to their own communities. These are the values that Edison stands for. This is what we try to develop in every single school we open. I am honored to be a part of the team that sits before you. I have never worked with another team more dedicated to urban school children. And I have valued my eight years with the Edison project and Edison Schools. Thank you, Chris.

And I failed to introduce Deborah properly. She is president of teachers colleges and for the last year and a half has been working on launching a group of teachers colleges for Edison across the United States. The last introduction I'll make and then we'll be happy to take any questions that you might 98 11/8/01 - EDUCATION - RES. 010642 have, is Reverend Floyd Flake. Floyd Flake was a five-term Congressman out of Queens, New York, where he founded a school and a very good one. He also happens to be for the last years, I think, the 6 reverend there -- 7 REV. FLACK: 25. 8

25, of the largest church 9 in the New York State, I think 12,000 -- 10 REV. FLACK: 13. Don't take away my 11 members. 12 (Laughter.) 13

And I'll tell you one 14 other thing about Floyd. If he had chosen go run 15 for mayor of New York City, I think yesterday's 16 results might have been different. 17 Floyd. 18 REV. FLOYD FLACK: Thank you, very much, 19 Chris. To those who are chairs to this important 20 meeting, I think perhaps the most important sometime in this City because it speaks to what I consider to be the most critical issue facing every City and this nation indeed, and that is the problems of education. And to those who are Members of the Council, Members of the Assembly, Members of the 99 11/8/01 - EDUCATION - RES. 010642 Board, it is indeed a great joy to be with you today. My background is one that is not dissimilar from most of you, many of you, in that I come from a family of kids, 5th, 6th grade 7 educated parents. By every definition, I suspect 8 that the levels of successes that I've had would not 9 have been projected, given the historical tendencies 10 to measure people by virtue of pedigree and a 11 limited pedigree by our definitions in general. But 12 Mother and Daddy and teachers, more importantly, who 13 made us expunge words like "can't" from our vocabulary, challenged us to understand that we would not be second class unless we dared to believe we were that. The levels of expectations that is were so high that we were challenged to know that there were standards and we had to measure up to the standards. And We could not make excuses or blame based on the fact that we happened to be a particular color. When I left home to go to Wilburforce University, I went without money, obviously, with a large family who could not afford it. A few years ahead of the modern day Affirmative Action movement 100 11/8/01 - EDUCATION - RES. 010642 and so I worked my way through school by virtue of a mother who taught us how to cook and wash and iron and sew and worked my way so that I could be able to do better than my parents, which is what their wish was. As I came out of college and went to seminary and then to business school at Northeastern University, one of the discoveries I made was that ministry had to be different. Ministry had to speak to issues of people and not just protest and not just prophecies about what ought be. And I came to a point where initially starting out with Xerox as a marketing analysis and then moving on to Pennsylvania here where I was a dean of students at Lincoln University fro three years which meant that I spent a great deal of time and in part lived in Philadelphia. Previous to that, served as a social worker for Horizon House Rehabilitation Center. And as you know, that was preparing people for job readiness as they were coming out of EPPI and out of Byberry. The challenge for me then became one of trying to get young people at Lincoln University and subsequently Boston University where I was dean of 101 11/8/01 - EDUCATION - RES. 010642 students to understand that they had within them the capacity and capability to achieve. Young people coming from North Philly, West Philly and other parts of this city who came to the institution, and in instances were not quite prepared for the environment, but because we developed the skills bank and other programs for them, by the time they graduated, they were capable of functioning in such degree that they made placements to Harvard and Boston University and Yale and other schools. I want that for every child. In 1976 when I went to Allen Church in Jamaica, the first thing I wanted for my congregation was a commitment to education. We built the school from the ground up. The young people in that school last year, according to statewide tests, 88 percent of my students passed math and literacy, 92 percent passed the statewide regents in math. And I Came to the conclusion several years ago that this can happen to every student. And the schools in my district, the highest rated schools, the students passed at no 24 more than 41 percent grade.

So the challenge for me becomes one of 102 11/8/01 - EDUCATION - RES. 010642 how to blend, not only the schools, but communities. As I said, I was here in 1970. I saw the migration of the people who dared to believe that their hopes were in moving to places like Wynnefield and Germantown. And as they moved to those communities, they expected more than they are getting in terms of education for their children. I saw eventually some of those same people move beyond those borders, and I see it happening all over America. I'm on the FannieMae foundation and what we've discovered is that many of the people who left come back and are out pricing those people who live in the communities. We can no longer afford populations that are shifting because we do not make adjustments to new paradigms, paradigms that are demanding educationally and paradigms where parent are demanding more. And If they don't get it, they generally leave the cities. When they leave the cities, the tax base erodes and there are cavities s in our communities that are left were there's nothing productive happening. As a pastor of a church that is responsible and it is chronicled in next month's Ebony, I understand, where we've been able to build 103 11/8/01 - EDUCATION - RES. 010642 community. We build community by concentrating on education and home ownership. You cannot have home ownership without quality education. Those persons who make a decision to live in a community what to know what the education is like. People who look in the want ads ves for a community generally look to see what kind of school they have available for their children. We must make Philadelphia that kind of City. And All we want to do here as a part of Edison is assist you in a process that brings us to a new place where people will come to the City as opposed to abandoning it. Children will leave the schools of this City, knowing that they can go to any institution in this country and when they make the pronouncement -- and as a former dean, I tell you, when you read an admissions application for students from certain cities and from certain schools you automatically dismiss them. " All We ask is that you let us partner with you. I'm proud to be a part of Edison, and I think if you work with us, we'll work with you and I 104 11/8/01 - EDUCATION - RES. 010642 think you'll find that this system will produce quality young people who will have a world class education. Thank you. REPRESENTATIVE WASHINGTON: I'd like to say that We've been joined by Councilman Mariano and Councilman Kenney.

Thank you. We'd be happy to answer questions you might have. REPRESENTATIVE WASHINGTON: Representative Thomas. REPRESENTATIVE THOMAS: Let me thank the Edison group for your testimony. It's good to know that each and every one of you individually and collectively is grounded in a good educational experience. ) REPRESENTATIVE THOMAS: You will find those who look like, talk like you, who have come from humble begins and have been able to rise to the top as a result of their exposure to the ic school system in the City of Philadelphia. ) REPRESENTATIVE THOMAS: Even though I 105 11/8/01 - EDUCATION - RES. 010642 moved -- we had to move times between elementary school and high school. I can tell you as a result of my experience in the Philadelphia public school system, if any of you were of Russian decent, I wouldn't be able to communicate with you in your native language because I learned Russian in middle school in the Philadelphia public school system. In law school I was able to welcome the Chief Justice from the Supreme Court of the Soviet Union because of my experience at Little Foulks (ph) Junior High School at 24th and Madison. , and come from other humble beginnings, as you know, the best can only come when the process moves from the bottom up, not from the top down. ) REPRESENTATIVE THOMAS: The unfortunate reality that you face regardless of your long years of experience and performance, regardless of that, 106 11/8/01 - EDUCATION - RES. 010642 the reality that you face is that you're asking to partner with a system that does have the capacity to bring about the same results that you have articulated. We have people like Dorothy Rush who is vice president of the Board, we have within the City of Philadelphia people who are able to do what you have articulated. I have been able to bring the Davis C. , to North Philadelphia to partner with Strawberry Mansion High School to expose young people to careers in law and justice. We went into Pittsburgh and brought to Carnegie Mellon School here to Philadelphia to partner with young people at Gratz High School on careers s around robotics s technology. So We know how to develop public-private partnerships. So The reality that you face is that the people of Philadelphia would like to have a choice in the outcome of the public education system in Philadelphia County. ) REPRESENTATIVE THOMAS: Parents believe that they should have some say-so, teachers believe that they should have some say-so, administrators believe that they should have some say-so, we as 107 11/8/01 - EDUCATION - RES. 010642 elected officials believe that all of them should have input in shaping the outcome of public education. And so the reality that we face is that we have a Governor who decided to make a commitment -- and I know that you're only here because in the beginning, you had som commitments that would be there in the end. So I understand your good faith. But we have a Governor who has engaged in a pattern and practice of hostile takeovers in the City of Philadelphia. ) REPRESENTATIVE THOMAS: You had no way of knowing that when Governor Ridge took office we had an admissions testing program in place that the Governor decided was no good because it didn't produce the kind of results that he wanted so he didn't have a problem with throwing $200 million of taxpayer dollars to throw out that admissions testing program and bring in his own. And There's a pattern of practice. And so the feeling in the City of Philadelphia is that -- and it's not a feeling, it's a reality. We have had nothing to say about our comment. I only ask of you that -- and I have a lot of respect for Reverend Floyd Flake. I 108 11/8/01 - EDUCATION - RES. 010642 sometimes refer to his message on dry bones and whether there is any life in dry bones. So I have a lot of respect for him.

I only ask that you step back and let Philadelphia County, its Board, its parents, its students, its elected officials have some substantive input in how public education will look in the City of Philadelphia. ) REPRESENTATIVE THOMAS: And we're ready to do what we need to do. And Please don't beat up on us about the 50 percent dropout. We know there's 50 percent dropout, but we also know that a 60 percent dropout in Allegheny County. ) REPRESENTATIVE THOMAS: We also know that there's high dropout and low performance rating in other counties in Pennsylvania. And We know that at if end of the day when you look at when we talk about equity and equalization of opportunity, it's unfortunate that we're in a commonwealth that has felt that in the City of Philadelphia, a child's education is not worth any more than $5,600. And that in Northumberland County a child's education is not worth no more than $3,300. While in the county 109 11/8/01 - EDUCATION - RES. 010642 next door to Philadelphia, Delaware and Bucks County, a child's education is worth to $13,000 4 as year. ) 6 REPRESENTATIVE THOMAS: There is 7 something fundamentally wrong when you say to me 8 that you should be able to have the same 9 expectations in Philadelphia County that they have 10 in Chester County or Delaware County when you're not 11 providing the same support for children. And I 12 don't want to say that it's because the child in Chester is white and the child is Philadelphia is black; I don't want to say that. I don't believe that's the underlying motivation, but I do know that there's a fundamental problem with the way public education is funded in Pennsylvania if we're not prepared to contract out to get to where we need to go. ) REPRESENTATIVE THOMAS: So In closing, let me just say, step back. Let us try to handle this. And maybe at the end of the day when we've look at what we need to do, we might be in a position to say, "Edison, come on home and join us 110 11/8/01 - EDUCATION - RES. " But at least let us have something to say about. Thank you. ) REPRESENTATIVE WASHINGTON: Thank you, Representative Thomas. He certainly preached his sermon in here today, didn't he. Representative James. REPRESENTATIVE JAMES: Thank you, Madam Chair. I'll be very brief. I won't even take two minutes. I just want to just thank Edison group for testifying. You really got a very, very impressive group, and I think it's great. But as Representative Thomas say, you know, we've got some educators in Philadelphia and Philadelphia County that's just as impressive, if not more. ) REPRESENTATIVE JAMES: What I want to ask you, my question to you is -- and I know that the Governor did his tricks, et cetera, to get you in here and all of that, but if we -- if it is determined that the people, the elected officials, the students did not want you here in Philadelphia to privatize our schools and you were paid whatever the governor said he was going to pay you, would you 111 11/8/01 - EDUCATION - RES. 010642 leave?

Are these mikes on? REPRESENTATIVE WASHINGTON: Yes, you can respond.

Did you want me to respond? REPRESENTATIVE WASHINGTON: Yes, we do.

We don't get to make the decision whether we're here or not, as you know. That's a decision that the Governor and the Mayor and Council and the Legislature will make. And as Phil Goldsmith said earlier, he manages the system. That's what we do, we manage schools and we manage systems. We don't set policy. That's done by all of you and many others of colleagues. And what you decide is what we'll do because we will go anywhere in America to build great public schools because that's what our mission is. And If we're asked to do that, we'll definitely do it. REPRESENTATIVE WASHINGTON: Thank you.

A point of clarification, Madam Chair. Did you say you don't have the choice about whether you're part of a hostile takeover or not? Isn't that a corporate decision you've got to 112 11/8/01 - EDUCATION - RES. 010642 make whether you're willing to come to Philadelphia in a hostile posture as a part of hostile plan by the State? Don't you have that choice?

Mr. Ramos, I said we don't get to choose whether we are invited here or not. That's a decision that policymakers in Pennsylvania, in Philadelphia make. The one thing I would point out is that there are many, as you know, there are many, many, community groups in Philadelphia who very much favor much of what we're about and what the Governor's plan is about. And In fact, you know that about a year ago we actually came to you and Mr. Goldsmith with one of those community groups to try to work as one representative set from the ground up. And We believe when at all possible to do that and there's a lot of community support for what's going on.

Point of clarification, Mr. Whittle. Now weren't you hired to do an evaluation of the School District? And did you not recommend that the School District be managed by a private agency and recommend yourself as that agency?

This is David Graff. I'm 113 11/8/01 - EDUCATION - RES. 010642 the company's general counsel, I'll respond, if you don't mind. We were commissioned by the Governor's Office to do a report, and we did do a report. There were several recommendations made in that report. If you look through the report, you'll see the recommendation span everything from a company like ours being involved to the District adopting other management systems on its own. So there were a series of options and recommendations that we provided as requested to the Governor, and we didn't favor one option or the another. Clearly, the Governor may have his own ideas about what he wants to do, but the report listed several options. And I think if you give the report a fair reading, you'll see that it's clear from the text.

You favored yourself, though, as being the providers or being the management company is that so? One of the problem is this: In Philadelphia, we didn't get the report in a timely fashion to be able to give it a fair review. We all wanted that. And I know that's not your -- well, I can't say it's not your fault, but we did not get that. So some of this has to be just based on 114 11/8/01 - EDUCATION - RES. 010642 assumptions and a quick review of what we got when we got it.

May I respond very briefly to that, with your permission?

Briefly .

The report that was commissioned by the Governor'S Office and that we did was part of a memorandum of understanding that was negotiated between the Governor and the Mayor. And the Governor and the Mayor set forth the terms and the timetable of the reporting, including date of release. So we essentially did what we were hired to do. The date of release was coordinated between the Governor and Mayor.

That's not true. As somebody that was involved in the original agreement between the Mayor and the Governor, which was originally 90 day agreement extended for another 30 days at the request of Governor Schweiker, what was contemplated by that agreement was that a few things would happen in exchange for a stay on the Title 6 lawsuit alleging that contrary to the statement that there has not been equality here in Philadelphia. What the agreement provided was that two things 115 11/8/01 - EDUCATION - RES. 010642 would happen after the 60-day review. The Mayor and the Governor would seek to agree on a partnership and would also negotiate -- it's a public document ther for the world to see. That there would be a spirit of negotiation, that there would be actual negotiations on what happens if we fail to agree. The agreement was to both work together on a partnership and act responsibly in getting to a contingency plan in case the State had to assume responsibility, it would be done in a responsible way. And More importantly, and it as at the request of Phil Goldsmith, that we not let this process disrupt the educational process back here because this is what we were trying to end in the City was a continuous period of turmoil and disruption and people in schools being distracted by stuff. What, if fact, did happen, and it was not by mutual agreement between the Mayor and the Governor was, you started releasing the plan to the media and you started rolling it out before you ever gave the Mayor the courtesy of seeing it. And you put out your takeover -- your contingency plan which was supposed to be agreed to. So if you want approach this legalistically, be candid and say that 116 11/8/01 - EDUCATION - RES. 010642 there were two parts of this agreement and you clearly violated the second in the spirit of the whole thing. (Applause.)

Mr. Surf, I just want to take a personal privilege again just to relate to something that you testified to which was, you know, how people from humble beginnings that have accomplish a lot come up with a sense of guilt among minority professionals. I just want to share that a feel a sense of indebtedness to schools and I feel commitment to removing barriers, the barriers that I had to overcome, but I feel no guilt about the choices I've made or about what I've been able to accomplish and no guilt about telling you that while everyone you've dealt with here has seemed like reasonable people, I think you will find it has been respectful and cordial, if you're part of a hostile takeover you and your shareholders will regret it. (Applause.) REPRESENTATIVE WASHINGTON: Councilwoman Blondell Reynolds-Brown.

Good afternoon, Edison Team. You mentioned in your 117 11/8/01 - EDUCATION - RES. 010642 opening remarks that the bottom line for you is how are the students doing, those that are currently in your system. So please allow me to put some of that information on the record and to hear back from you on some fact-finding. You highlight the problem of turnover in Philadelphia schools in the Governor's report, yet out of teachers left the Edison Charter 10 Academy in 1999 and 18 out of the 25 quit in year 11 2000. How can we expect you to improve turnover in 12 Philadelphia given the current performance in that 13 specific area? 14

As I said in our remarks, 15 we're not perfect and we don't claim to be. Do we 16 have situations where we have high turnover? Yes. 17 But if you look at our system-wide turnover, our 18 averages, not at one site, but across all sites -- 19 and have you have to remember many of our schools 20 are first-year schools that are just starting. If 21 you look at overall system-wide turnover, a very 22 challenging, often the toughest schools in a 23 particular system, it's considerably below what you 24 see in inner city schools' teacher turnover. 25 You have schools in this community, and 118 11/8/01 - EDUCATION - RES. 010642 we can go through them you if you'd like, that have 40, 50, 60 percent turnover rates, but you shouldn't judge the whole system or one or two or three such situations. Do we have schools like that? Absolutely.

You also mention in your opening remarks that you currently have 65 schools, 62 are currently in place and you've lost at least three contracts. Let's separate them out before I proceed with my additional questions. What three school districts are they?

I said since the very beginning of our company we had one 65 contracts, you're correct, we have 62 today. We have loss three.

And the are?

And they are Sherman, Texas, which we decided not to renew a contract after five years. (Interruption.)

If I could please speak. Second, Lansing, Michigan, where we were 119 11/8/01 - EDUCATION - RES. 010642 terminated by the Board there and which, frankly, we deserved to be. We did not do a good job in that school. And then finally Goldberg, North Carolina, where academically the school versus where it was when we first started was considerably better, but we were on the wrong side of some politics there.

Okay, then let's speak to Chicago. Again, speaking to your opening comment, how are students currently doing within your system. Third grade scores fell at nearly 43 percent of Edison Schools testing for math in that grade with the Chicago Math system. In your report to the Governor Schweiker you propose using the same math system for Philadelphia schools. If this did not work in Chicago, why are you suggesting it is a best fit for Philadelphia?

Out of our 136 schools nationwide, we have three in Chicago. It's 1K12 Campus. And John Chubb, would you like to speak to that.

With all due respect, the information that you have about Chicago is incorrect. Out of our 136 schools, every one of 120 11/8/01 - EDUCATION - RES. 010642 them uses the University of Chicago program except for the school in Chicago.

What math system does Chicago currently use?

They use the Saxon Math Program (ph).

And where does that program stand with other programs in the Edison system?

We have one school that uses that as opposed to 135 others that use Chicago Math.

SO you're telling me that that fact that I gathered from research is incorrect?

That's incorrect.

Okay, lets proceed. First of all, you state mission statement, and I quote, "High tech classrooms, motivated teachers and dramatically improved student test scores all at no extra cost to taxpayers." That is what you call the Edison promise. Edison has been widely criticized for cost overruns and vague contract language. Dallas 121 11/8/01 - EDUCATION - RES. 010642 is afraid it will have to pay up to million more than is 35 million contracted for . What can we look forward to with the potential Philadelphia experience? And Please speak to the current status in Dallas.

All of our contracts are 8 fixed price contracts. There's no way there can be 9 to cost overruns. They state a number; that's what 10 we are paid. If you look at that number nationwide 11 -- and you are correct in stating that our mission 12 statement is that we will do a good job for students 13 on existing resources that exist. Our nationwide 14 per pupil revenue is slightly less than the national 15 average in the United States, and I think we're 16 fulfilling that promise quite well. 17 If you look at our schools in Dallas, we 18 receive roughly the same amount as an average school 19 in the City of Dallas on a per pupil level -- and 20 we'll be happy to show you that map. And our schools are doing very well there. Six of our seven schools -- one of them is not, but six of our seven schools we're proud of the first year progress.

Are you familiar with Chicago Math? 122 11/8/01 - EDUCATION - RES. 010642

Am I?

Yes, the program used by you. This was actually stated in your report speaking to the current test scores in Chicago based on your program. And it came out of the report in Chicago Math. So you're telling me the information that we're seeing that we've read and that we're receiving in documents is inaccurate?

As you have represented the information, it is incorrect.

Point of order. As a member of the Education Committee, I would request that the Chair please inform the gallery and spectators that in order for us to really understand what's going on, we need to be able to hear. It seems that every question is met by some form of outburst from the audience. And with all due respect to them, I'm here to learn as much as I can as a member of the committee. I'm sure that the chairwoman would not expect this kind of activity to go on in Harrisburg . I know it doesn't. And I would that request that we could perhaps have an orderly hearing so that we can hear and be informed. Whether we disagree or not in the end is another 123 11/8/01 - EDUCATION - RES. 010642 story, but I think we should show some respect to our witnesses, all of the witnesses. REPRESENTATIVE WASHINGTON: One of the things I will agree with that in order for us to move forward, it is now after 4:00 o'clock we've had the first three presenters. So I think that what the councilman has requested is agreeable. I'm saying that we will not have the outburst in the back so we can clearly hear and that the taping and the cable taping will be clear when it airs on TV. So if you would continue with the beginning of the Councilwoman's question, Mr. Whittle.

I think your question was regarding Chicago Math. By the way, we were having trouble hearing you as well. John, would you like to resume?

We use a program that was developed at the University of Chicago in all of our schools, some 135 schools out of 136. There is one school in Chicago that we work with. It's a charter school that began working with a different math program before we began working with them. We've kept that math program in place, and it's called Saxon Math. That's the only exception to the 124 11/8/01 - EDUCATION - RES. 010642 Chicago Math program within our system. And it may cause some confusion because people think schools in Chicago, Chicago Math. But the school in Chicago does not use Chicago Math.

One final question, Madam Chair, on this round. Philadelphia prides itself on having what are called wrap-around services for the young people in our school system. In the report and throughout this process, I've heard little spoken to the kind of support services that young people need. And in addition to that, what -- I understand you currently have activity in Chester. And in and earlier hearing where you had been invited and were not able to attend, we learned currently in Chester those children needing mental health support services, that is not in place. Please speak to what you currently provide and what consideration has been given to that given a potential activity here in Philadelphia?

Let me talk on a couple of levels. One in the report as we looked at the school systems here, our basic focus is on the core 125 11/8/01 - EDUCATION - RES. 010642 academics in the report. What we did recommend or one of the options that discussed, I believe, was community outreach ad involvement in the schools and having community partners coordinate what we call student support services in our schools. And let me talk to you about what Edison does and how we manage it in Edison schools and the Learn Now schools where we are part in the merger. We have something called a student support manager in each school whose job is coordinate those services for parents. Typically, you don't find that staffed in a typical school. We have a professional, trained person whose job is to coordinate what are typically termed wrap-around services as well as some special education outreach. One part of the proposal, I think, the Governor put forward, not necessarily detailed in our report is that community partners and what are being called the partnership schools would actually play that role and help to support the wrap-around efforts in schools.

Is that the current practice in Edison?

Yes. 126 11/8/01 - EDUCATION - RES. 010642

Thank you, Madam Chair. REPRESENTATIVE WASHINGTON: Thank you, Councilwoman. Next we're going to have Mr. Mike Mash .

Hi, good afternoon. Or maybe by now it's good evening. I'd just like to introduce myself. I'm Mike Mash, I'm the Chair of the Finance Committee at the Board of Education, I'm vice president for budget and management at University of Pennsylvania. I'm an Adjunct Of professor of government at the Fell Center of Government at Penn. I'm the former budget director of the City of Philadelphia under Ed Rendell and helped to write the financial crisis for the City. I'm a life-long Philadelphian and I never left. I guess I need to tell you those things because although you called to schedule an appointment with me three times, three times you've cancelled it, so since you're introducing yourself, I'd like to introduce myself back again. (Applause.)

Mr. Whittle, could you tell me how many contracts Edison has now in which Edison 127 11/8/01 - EDUCATION - RES. 010642 serves as the central office manager for a school district in the way Governor Schweiker is proposing?

In the exactly the way he is proposing, none. REPRESENTATIVE WASHINGTON: Did you say none?

I said none.

Could you tell me when Edison decided to open this new line of business selling services as a central office manager? I ask because I've read your 2000 annual report and I don't think you have a 2001 one yet. I couldn't find any mention of this as a line of business that Edison was in or was intending to enter into.

This is actually not a new line of business. There is one example of a very large school system that we run in every aspect, and it's called ours. We manage 136 schools, 75,000 students all across the United States in 65 complicated relationships. That is a difficult management task. And In terms of our capacity to run a school system, it is the primary thing that the State of Pennsylvania is relying on. And they're relying on the results of that school system 128 11/8/01 - EDUCATION - RES. 010642 as well.

My understanding, though, is that you were -- again, according to the annual report, your expenditure basis was about, I'm just going round off, 260,002,000 and you had losses of about 38 million. So you're saying that is a comparable basis to run a 2 billion-dollar public corporation?

Our current revenues are two and a half times that, sir. And that is public record. They're $534 million. And a couple other things I think that are important to point out here. If you look at loss per student and you compare the loss per student, in other words the deficit per student in the City of Philadelphia and if you look at operating loss per student at Edison schools, it is School District's loss per student is rapidly rising to catastrophic proportions. If you look at Edison's loss per student, it has been steadily falling. And three quarters ago, it actually crossed into the black. And so if you want to look at financials to financials, I think it's important to also look at how those budgets are being managed all the way 129 11/8/01 - EDUCATION - RES. 010642 down to the bottom line. And on that, we'll stand on our record, fine, and compare it to the District's.

The Governor's plan calls for within a couple years ramping up and basically forestalling this by using deficit financing in the interim, about 225 million in spending reductions and increases and non-tax revenue which represents about percent of the current expenditure base for 11 the School District. It looks like about 50 million 12 of that gets put into increases for educational improvements, some of which we had detailed and some of which not. So I get to something like 150 million to 180 million of net reductions that need to get made. Do you support that recommendation?

It was hard for me to follow you, but to the extent that it is accurate -- and I really couldn't follow your math. But to the extent it was accurate, we support what we gave to the Governor in terms of recommendations.

But your plan did not -- you didn't actually have a plan to balance the budget. You identified in your plan some possible areas for 130 11/8/01 - EDUCATION - RES. 010642 savings. The Governor's committed to a specific level of expenditure reduction.

Here's what we said. Let me be real clear about this. We sent Governor -- let's look at three things here, and I oversaw the analysis, so let me try to take you back up from the detail level and up to a level where we can actually explain how we did the work. We took a look at the District budget as it stands now and said, Let's look at that as a baseline. And I think Phil commented here that we pretty much validate the numbers. There's some legitimate disagreements about assumptions, but there are assumptions that you're not always going to agree on them, so we pretty much validated the budget. And then we said, there are some investments that have to be made educationally, some things that aren't being done that should be done. Here is how much they cost. Then we said, Here are some things that are being done and shouldn't be done or that could be changed and these are the efficiencies. Net that out to the bottom line and we 131 11/8/01 - EDUCATION - RES. 010642 said, Governor, here's how much we think it's going to cost. Now, where that comes from wasn't our call. But basically that's how we did our analysis in 60 days.

But if you are hired as the central office manager, are you endorsing the Governor's plan which would call for a reduction of about percent in current basic expenditures? 11

What we said to the 12 Governor, what we said, and I think we said this the first day we came here was that we wouldn't give anything that we wouldn't sign up for. We wouldn't give a plan, a set of recommendations that we wouldn't be prepared to implement ourselves. So The answer to that is yes.

So the fact according to the State Commission Standard and Core Study, spending per pupil in Philadelphia is percent less than 21 the state average and this would reduce that still 22 further -- 23

That's not true. What it 24 would do it actually increase it. There would be 150 million new dollars coming in, you know, a 132 11/8/01 - EDUCATION - RES. 010642 little less than percent. So actually it would cut the distance almost in half between the standard of Poors numbers that I heard you guys talk about earlier. Our recommendation was that Some of that gap be closed. And We heard that from a lot of you in meetings. And you said, Hey, how can you come in here and tell us that we need to make changes and that we don't need more money? So part of what we are seeing here is our company saying to the Commonwealth, Commonwealth, there are some investments that have to be made here. Now, how that gets done is a political decision. But We did in our analysis lay that out. And that's fact.

Mr. Wayde, I'm looking at the Governor's plan. The Governor's plan has some increases in educational expenditures, some money for your management fees, some additional spending for debt service for the deficit financing fund, some money set away for a rainy day fund. And balanced against that is $170 million of additional and State and City money, hoped for $10 million a year in addition federal money and 225 million of cuts, 830 million over the five year plan, which is 12 percent of the current spending base. So That is 133 11/8/01 - EDUCATION - RES. 010642 two Governor's plan. If you come in as central system manager, is that your plan?

Well, I tell you what. When you talk as cuts as if we're going slash things, what the bulk of that is actually reprogramming. What we've done, if you dig into the plan, what we tried to propose here is that we reprogram the way spending is done. And so we talk about that in the plan. So It's not cuts. It's actually --

No, it is cuts. You can't do the math. There is an absolute proposed reduction in expenditure. If you reprogram a dollar for one use to another and if you do not cut 225 million in current spending -- now, maybe by efficiency only with no harm to the educational program, right? But if you do not reduce current expenditures 225 million, you don't achieve the balanced budget in the Governor's.

I would agree. That's right.

So you believe that even though -- because you're proposed increase in educational spending is not reprogramming that whole 225. It looks to me like it's about 25 percent of 134 11/8/01 - EDUCATION - RES. 010642 that. The rest is just an absolute expenditure reduction. Right.

That is correct.

So basically, your conclusion is we really have too many dollars here in Philadelphia and the plan we should adopt is not one where we reprogram all of that money; if we can't realize efficiencies, we should just spend less even though we already spend much less than the statewide average.

That part of your conclusion is incorrect, in my view. There's a simultaneous equation here involving three things and it's actually how we did our work. The first thing we did is we said, what are things that need to be spent in this District that currently aren't being spent to improve to education in the District? That was one bucket of work that we were assigned to do. The second piece was, what dollars are currently being spent that are not as efficiently spent as they might be? And that's the particular bucket that you're focusing on. And the third piece is, what are new 135 11/8/01 - EDUCATION - RES. 010642 revenues that is might be realized? It's the combination of those three items that actually wind up as the total. And If you look at it, the total revenues coming to the City of Philadelphia in this plan is considerably greater than it currently is. And the reason is, today, the City has spent -- not the City, but the District is spending money it doesn't have. And So we have proposed 160 million, if you take the 75, 75, 10, of new revenues to the District.

Right, absolutely. There's no question that there's proposal for additional spending. Unfortunately, a lot of it goes into things that don't seem to translate to increases in spending to improve education. The majority of the cuts are going to get used in other ways. My concern is, the time I've spent looking at the budget of the School District, I believe -- and you've heard from the interim CEO and you've heard from the CFO and you've met with the CFO. We believe there are cuts that can be made responsibly, not as deep as you're proposing, but they ought to get made. But the delima is there are, as you say, many areas in which we're absolutely not spending 136 11/8/01 - EDUCATION - RES. 010642 enough now. And a trade off of three dollars in absolute spending reductions for every one dollar in increased investment in education seems to be the Governor's plan, and I just want to understand whether all other things being equal you think that that is the plan that you would want to endorse if you were the central office manager.

We've answered your question.

Can I do one more? REPRESENTATIVE WASHINGTON: One more question.

Last one. Mr. Whittle, I'm going to paraphrase because I don't have the article 16 in front of me. But in this month's Philadelphia Magazine, you set up a little hypothetical model. You said, you know, the School District spends about 8,000 a student and I'm not sure you what did for the class size. But let's say if you had 30 kids in a class, 8,000 a kid, that's $240,000. It only cost $60,000 for the teacher. "What do they do with all the rest of that money, I just can't understand it." So did you not read the School District's financial plan and not know that 3,000 of 137 11/8/01 - EDUCATION - RES. 010642 that is for debt service and special ed and that the actual number in a classroom is 5600. And is that 5600 enough to handle the utilities for our buildings, a Principal, a nurse, a counselor, a librarian, books, custodian, and the other things that is are not in the school budget like special programs for hospital and home-bound kids, specialty teachers for music and art and the rest? You asked the question in Philadelphia Magazine, "What did they do with all that money?" Are you telling me you don't know? (Applause.)

We do know, and we know very well because we run 136 schools.

So the answer is you do know ?

We do know. We absolutely know the Philadelphia budget and in our budget. And we know it in line item detail down to levels that I think you would be surprised. And The reason I was stating that in the magazine, and I'll state again, is there are teachers in this room, and a point we often want to make and I was making it there and I will stand by it, is that money in public education 138 11/8/01 - EDUCATION - RES. 010642 is not getting to the classroom, full stop. U.S. Department of Education 120 days ago release a report that said 40 percent of U.S. education spending is in general and administrative cost. Compare that to any private sector. You will not see that number. Our mission is to get our central cost down to seven cents on the dollar and maybe lower. And The point I was making in the Philadelphia Magazine is to just show in a very easy way to understand how significant the problem is. Was I saying only Philadelphia did that, no. That's true in New York, it's true in Washington, it's true Baltimore. But it is a problem that we all need to attack and attack vigorously. And The way to do it is to streamline non classroom costs so you get more dollars to the classroom. And If you want to see two examples that we have proposed in that regard, we've proposed $7,500 raises to 1200 teachers in the school system and 30 percent performance bonuses to principals in this system. How did we do that?

You did that by cutting the budget 180 million.

We did that by looking for 139 11/8/01 - EDUCATION - RES. 010642 places that we didn't think were as efficiently done and moving them to teachers and principals where we believe children are educated. And we'll stand by that every day.

As you know, where we are is we have your assertion, we have the request for the backup detail, we will look forward to receiving it. Until we receive it, you understand our having some reasonable skepticism because the depth of the cuts that you're proposing in a district where the average level of spending is -- where the level of spending is so much less than the average, where we see so many un-met needs. Reprogramming, great; efficiency, great; we're for that. But What we see is a net reduction in the number of dollars that is go into education. How you would propose to do that, none of us here knows yet. So you understand that we've got to suspend judgment, but we want to get on the record now the magnitude of what's being asked for, which means we have a lot of due diligence to do.

Point of order. I think we need that detail now. I want to hear it now. 140 11/8/01 - EDUCATION - RES. 010642 (Applause.)

I want to hear it now. I want to hear how they're going to do those cuts. I want to hear how they're going to spend this money more efficiently. But I want to hear it now. I don't want to hear it when the takeover is afeta compli. I don't want the people of Philadelphia to wake up one day and say, "Well this is done. It's a done deal." The data has to be submitted so that the people of Philadelphia know what the details are. (Applause.)

Can I respond? We've reviewed the data with the district line by line. The Governor and the Mayor work on a process that will allow us to review in detail some detail -- and, in fact, I think the Board is familiar with at least my eagerness to get in the trenches with staff folks and actually get the work done at the staff level. So we're not -- Edison isn't withholding anything. (Inaudible question asked.) A couple things. One is we We reviewed the line by line budgets with the district. We 141 11/8/01 - EDUCATION - RES. 010642 started that process last Thursday. We continued the day before yesterday. The Governor and Mayor work on a process whereby we will continue that review in some detail with the staff. So It's not like we've been withholding it.

You make some assertions that are almost facts in your report. And obviously, you don't have the data in order to make those assertions. REPRESENTATIVE WASHINGTON: Pedro, would you like to respond just briefly? And then on to Councilman Nutter.

I just want to clarify the record a little bit. Are you saying that the School District at this point has received the documented detail?

No, I'm saying we've given you a P and L. We not have finished the exercise. And We have, obviously, more to go.

Did Edison ever make a commitment to Mayor Street that before the report was released that he would be have an opportunity to review it?

We said to the major to the 142 11/8/01 - EDUCATION - RES. 010642 extent possible we would come in and review with the major -- let me just finish. As part of that process our client ultimately was the Administration. And It was their decision that we put our plan together, give it to them and that they present it to the major.

So The commitment was not kept at the request of your client?

Correct.

Thank you. REPRESENTATIVE WASHINGTON: Councilman.

Thank you, Madam Chair. I just have a couple, what I'd like to refer to as some initial background questions before we get into the items of today. Mr. Whittle, actually, the first thing I had written down -- this was a while ago. I'd just like to get your thoughts about this. I was initially going to ask for you to spell the word stigmatize, but I assume that you already know how to spell that. I am intrigued, though, by your thoughts about some of the comments by the Governor that led to a little bit of a fire storm here in the City 143 11/8/01 - EDUCATION - RES. 010642 about reading levels and who can read the newspaper and who can't and those kinds of issues. I'd like to hear your response to the tone and tenor to those comments. What's your reaction to that?

I mean, here's what I can say. I think that --

I'm sorry, Mr. Wayde, with every respect to you, I actually asked Mr. Whittle the question.

I actually wasn't on the ground the day those comments were made. I think Gene was, that's actually why I was giving him the mike because he actually heard them and had something about it.

Well, I appreciate that. Do you read the newspapers here in the City.

I try every morning. There's a lot to read these days.

Did you read the paper about those comments ?

I did.

So what did you think about them?

Well I think -- this is 144 11/8/01 - EDUCATION - RES. 010642 what I think. I think the Governor was trying to convey not to students in any way are at fault -- there's not one person at this table that ever believes that a student is at fault regarding how they're achieving. The Schools are at fault, not students. And It's important that schools help them succeed. I think that's what he was trying to convey. He's saying, what they've got here is a situation where 13, percent of 11th graders can 11 read at 75 percent comprehensive levels of the 12 Philadelphia Inquirer. That's obviously something 13 to be concerned about, and I don't think it was 14 designed as a criticism towards the students.

Well, schools are, at the end of the day, an inanimate object. The building. So in your comments you said that schools failing the students.

Yes.

Who exactly is failing the students? The buildings don't teach them anything.

Schools are, as John Chubb has often said, they're not islands and they are part of a school system. And Here's the way I would 145 11/8/01 - EDUCATION - RES. 010642 put the question back to you, is that we know everyone in this room knows the following facts, somewhere between 57 and 60 percent of the children in the Philadelphia public school system on the PSSA are below basic or at basic levels. And We also know --

I appreciate the statistics. I probably don't read as much as you do, but I read a fair amount. The question was, who is failing the students? I don't need the statistical data to back up or justify the argument.

I was going to answer that. If those were our schools and we have some like it, we are failing the -- we, the adults, are failing these students. Full stop, no 17 qualifications. We are failing.

Now, there were at least two meetings that I participated in. One was downstairs in 319 with a group of black elected officials, the other was in the City Council Caucus Room. I think the Caucus Room meeting may have been first, the other meeting may have been second. And I thought I distinctly remember at the time that you said that the company was not interested or ready to 146 11/8/01 - EDUCATION - RES. 010642 manage the entire school system. Now, was that not true at that time, or did you change your mind?

I think the specific thing that we said was that we were not going to turn every school into an Edison school. That's exactly what I said, and I still stand by that; that it didn't make sense to take our curriculum the way we manage our schools with this particular design and recommend that design. And I think I went on to say, and I think that was me who said that, that there are some great schools in Philadelphia and there are some middling schools and there are a whole bunch of schools at the bottom, and you've got to think about them differently. That was the context in which they was made and that was the intent of the statement.

Well, I appreciate the context. Let me understand this, then. At what point did you decide that you should run the system?

My point -- I think we said to you when we talked to you before, that the issue of whether we ran the system or not, we were always prepared to be here. I think we said that. What we did say was that we weren't prepared to take every 147 11/8/01 - EDUCATION - RES. 010642 school and turn it into an Edison school. And just to really get to the answer to your question, when we signed up for the assignment, it's a public record, it's part of the contract, that we were going to make recommendations or present options to the Governor and that the Governor would then decide and Mayor through this process whether or not we were here and what that looked like on anything we were here and what that looked like. Anything that we proposed, we had to prepare to do. So the day we signed it, we were prepared. And I think we've been stating that all along, everybody, including private meetings and in public.

That you were prepared for full operational management of the School District? You're saying that you've always said that from the start?

Yes.

That certainly was not my understanding. Can you provide to the Chair a detailed budget for the report that was produced? The cost of that was $2.7 million; is that correct? Can you provide a detailed budget as to what that actually 148 11/8/01 - EDUCATION - RES. 010642 paid for, how many people worked, who those individuals were, any vendors that were paid or other expenses that show a complete matching up of the $2.7 million and where it went?

I'm happy to respond to that. That is essentially a decision the client has to make. And The client is the Governor's Office and Administration. We did prepare a budget for them. If they deem fit to release it, we certainly don't have a problem with that. But the relationship is between -- we were hired by the Governor's Office and it's really a decision that they have to make.

I appreciate that, but I guess now as a Pennsylvanian who does as an individual pay taxes in the Commonwealth as public person, are you saying that you did work for the government and you can't provide us with an explanation of how you spent our money?

Having said that, we do have budgets that is have been released. And in fact, a couple of your newspapers have already gotten copies of them from the Governor's Office. So we can certainly take that information and send it to you. 149 11/8/01 - EDUCATION - RES. 010642 It's a public record. Portions of it that they are releasing out are public record.

Just to clarify. To the extent that the Governor's Office has already released it, it's a public document and you're certainly welcome to it.

But I want to understand Mr. Wayde's response. Are you only going to give us the part that have already been released by the State or are you going to give us a complete detailed analysis of the entire $2.7 million and how all the dollars were spent?

Whatever they processed and approved, sir, they're releasing. Some of it may not have been processed. We haven't even paid for all the work yet. So It goes through an approval process. And I think you're all aware of that. That process will get started and our final bills are being submitted because the project just ended.

I mean, you know who your vendors are and -- whether people pay or not, you know who you're going to have an invoice for, right?

Yeah. 150 11/8/01 - EDUCATION - RES. 010642

Now, I have been intrigued by this for some time. Why is it that you don't manage any schools in your headquarters base City of New York?

We currently have schools in New York in the following places, Buffalo, Rochester, Long Island, the Bronx, which is -- we're head quartered in Manhattan. We're moving our headquarter to Harlem. We just received zoning approval to build our first school in Manhattan from the zoning commission in New York.

This is a school that you're building?

Uh-huh.

Are you managing of the or have relationship with -- I don't know what the system is called. We're the School of Philadelphia. I guess It's called the School District of New York City.

We have one charter school here in Philadelphia.

He's saying New York.

Oh, no. We don't. We have a charter school through the State Board of Regions 151 11/8/01 - EDUCATION - RES. 010642 in the Bronx, as well as the others in the state we manage.

I understand. My question was about is it called the New York School system or --

Yes.

School District of New York City?

New York City Board of Ed.

Do you have relationships with any of their schools?

No. 14

Now, what is your expectation in terms of educational outcomes and do you expect to exceed the current education outcomes based on the present funding level and funding stream that the School District receives right now?

Our general expectations, which are based on our experience in public schools in urban areas all over America, is that students will make rapid progress on the State criterion reference test. And if a Norm reference test is used, then on that test as well. Our recommended goals in the report that we have submitted are that, 152 11/8/01 - EDUCATION - RES. 010642 number one, for student-- for schools, rather, that is are the lowest performing or low performing which means they have more than half of their students in the lowest category, that those students would progress at a rate that the schools would have less than half of their students in that failing category at the elementary levels within five years.

That's based on the present level of funding?

Based on the plan that we're recommending.

What would the per student expenditure that's been much discussed in our City for some time, what would the per student expenditure be under your plan versus what it is today? And what is it today based on your analysis of the District's finances?

Do you want the answer on the basis of the total amount being spent by the Direct or the total amount being received by the District? Because they're not the same.

You can do both.

The total revenue in the District today -- excuse me, this is the 02 year, is 153 11/8/01 - EDUCATION - RES. 010642 projected in the range of $9,000 per pupil, which is roughly 1.8 billion divided by roughly 200,000 students. I'm averaging this. And in the fifth year of this plan the revenues --

I'm sorry, this is your plan?

Yes. But by ther way, that revenue number is not that different than the current revenue number. It's roughly a 1.8 billion revenue base.

What's current per student expenditure?

Roughly $9,000.

Today?

All categorical state, federal, local, everything.

And is that the way the calculation is usually made?

Yes.

And what will it be under your plan?

Total revenues will rise, as Mr. Mash said by about 150 million, which roughly is $700 per student additionally. And those are the 154 11/8/01 - EDUCATION - RES. 010642 State and City funds.

There's been some discussion about some of the schools or some of these partnerships, I guess they're called, will be able to retain 2 percent of their overall budget. I wasn't crystal clear where that 2 percent calculation was coming from. What is that for, where does it go, and how does it get spent.

The idea was, I think I may have eluded to it earlier, that certain of the wrap around type services that groups typically fund and do, we have in the school design that we would use and we'd recommend and that the group that would be partners in these schools would actually perform that service. So the SSM, for example, the Student Support Manager that I discussed with you earlier, rather than being directly in the school, would be someone that the -- it would be a team of them that the community groups would actually hire and manage and partner with the schools to deliver those services. So the idea that there'd be wrap around services and coordination of wrap around services through the community partners.

I appreciate your 155 11/8/01 - EDUCATION - RES. 010642 response. I have no idea what you just said, but I'll read the transcript.

Councilman Nutter, just a point of clarification on the answer you got. The answer you received to the question of what's the per pupil expenditure was $9,000, is that correct?

I thought that was the answer, is the first I've ever heard that number here in Philadelphia.

Would that be 1.8 billion divided by 200,000 students in the School District or by 215,000 students funded by the School District?

I have no idea. I just thought the $9,000 was quite intriguing.

To answer your question --

The point, Councilman Nutter, is that it's clever math because it excludes all the charter schools being funded from the $1.8 billion.

Mr. Ramos, we weren't trying to do that. I guess asked to do some math up here quickly, we looked at the budget and said I think the per pupil -- you take 215,000 kids in the 156 11/8/01 - EDUCATION - RES. 010642 system, you divide it by the total revenue and you get to a number that's somewhere around grand a 4 kid. That's the short answer. I mean, I can pull 5 out my calculator and actually calculate it for you. 6 I don't have that in front of me. But I thought 7 what you asked total revenue of the District divided 8 by number of kids. 9

You can do it any way you want. The numbers that are generally talked about here in the City, I think, are usually in the seven-something range, so -- I mean, I was intrigued by your nine, but I figured you had a HP or something over there and you were doing better than I was.

No, these aren't our budgets, these are their numbers. And let me tell you, what you raise is a really good issue. Part of what we saw -- and think I'm going take this and try to provide context here -- is that part of the accounting here in the District math is to exclude categorical dollars and a lot of other kinds of dollars that are actually used to program what we consider to be core functions, like curriculum, professional development, training. And because 157 11/8/01 - EDUCATION - RES. 010642 they're in a different, quote unquote, category, they're not counted as part of the budget. For example, when we tried to drill into those numbers, we couldn't figure out where some things were going. So When we look at the school, we look at the entire resource base available and how it's used in the classroom and in management. That's why you got that answer from us.

Now, if this was all to work out, tell me what happens to the present 260-million-dollar deficit? Does that go away?

Yes. I think we submitted a proposal, a report to the Governor that recommended certain options. We said here's some options for actually trimming down the budget while also making investments. So Under this plan, the budget deficit will go away in part because $150 million in new resources will be coming into the District.

The answer to your question is yes. The deficit goes away over a three-year period based on deficit financing, new dollars coming in, and cost reductions.

What I would like to say is that this year's deficit, no matter who is managing 158 11/8/01 - EDUCATION - RES. 010642 the District, this year's deficit will have to go away by some form of deficit financing. I mean, reasonable people, and I think everybody would agree, including the district empowerment plan, that you've got to actually finance out. This year's deficit was by and large you can't adjust the cost structure of the District this year. It's already in place.

My last question is, there was a hearing back on September 24th about these issues convened by Councilwoman Miller Education Committee, and I took down earlier that you had some 7,000 members of that as a team. That must include all of your teachers and all that. At headquarters, I know in this document it says you have I think 342 people. Maybe it's larger by now. I don't know when this was produced. Can you tell me why no one came to that hearing?

I was actually scheduled to go to that hearing, sir, and got called to Harrisburg in connection with this project. So that's -- I reached out and informed the Councilmember that I couldn't make it and that we'd 159 11/8/01 - EDUCATION - RES. 010642 be prepared to come back in.

If the other ten people that are here with us today, none of them could come to a City Council hearing?

I was actually scheduled to go and I was planning to be here. No one else was scheduled to go. I was actually planning to be on the hearing, me. On the day before the hearing, I had called Harrisburg, and I think it was shortly after when the Governor was brought -- was bumped up to the White House and the new governor was sworn in. It was during that period, sir. So In connection with all that, I felt it was important to try to serve the client and get to Harrisburg and help sort out where things were. It was a period for of all us of great difficulty. So, yeah, I did reach out and told the Councilmember who was holding the hearing that I wouldn't be here.

I do appreciate that. And As this concept and relationship evolves, I would only ask that for the half billion dollars at a minimum that we'll be contributing to this, that going forward we would get the same level of client service since they're our children. 160 11/8/01 - EDUCATION - RES. 010642

I think that's a fair request. And the reason we're here today is exactly that. We tried to be here with as much of our senior management as possible.

Thank you. Madam Chair, you've been most kind with the time. REPRESENTATIVE WASHINGTON: It's getting ready to ring on you, so...

I know the plug was getting ready to get pulled. Thank you. REPRESENTATIVE WASHINGTON: Thank you, Councilman. Councilman Ortiz.

Thank you Madam Chair. You're listed on the stock Exchange, is that correct, Mr. Whittle?

The question was are we listed on Stock Exchange?

Yes.

Yes, we're on Nasdaq.

I have here your latest filings with the SEC. That was in December of last year. 161 11/8/01 - EDUCATION - RES. 010642

Do you have a date on it, sir?

I have one that's December of last year. And in here you're explaining SEC you have explanation of what additional risks that may affect your future results. And one of the categories is that you're a young company having opened your first schools in '96, it makes it difficult to evaluate your business. In essence, what you're asking the SEC is that since you're so young and can you not be evaluated, to wait for results to happen. And If you fail, then the stock goes down. But you're asking, in essence, the SEC for the parents of Philadelphia to wait for your results to happen. And we're sort of like the guinea pigs that are going to be tested in your SEC report here, because you haven't proven it. And you say here that -- it says, "We have not yet demonstrated that public schools can be profitably managed by private companies. And We're not certain when we will become profitability, if at all. Our ability to become profitability will depend upon our ability to generate and sustain higher levels of both gross, 162 11/8/01 - EDUCATION - RES. 010642 site contribution, and total revenue to allow us reduce central expenses as a percentage of total revenue. Even if we do achieve profitability, We may not sustain or increase profitability on quarterly on annual basis. Failure to become and remain profitable will adversely affect the market price of our Class A common stock and our ability to raise capital and continue operations." My problem is that if you don't achieve that, you will close up shop and leave.

You're exactly right, you're quoting ur SEC document. And if you look at Microsoft, General Motors, General Electric and every SEC filing, they are required --

Sir, I am looking at yours. Just explain yours.

I understand. But I'd like to respond please. Every SEC filing is required to show potential risk to investors. Doesn't mean we believe that those risks are going to happen.

BUT, you see, the difference, the difference with General Motors and IBM and others is that they make cars. We have 163 11/8/01 - EDUCATION - RES. 010642 children. (Applause.)

And the Excel (ph) may fail and Ford may still be in business and the Corveyer (ph) with the motor in the back may be a hazard, but we have children. It's not the same thing. It is not the same thing. I'm sorry. (Applause.)

By the way, we are all from humble beginnings in this Council. REV. FLAKE: That means we have a kindred spirit.

And I'm from the lower east side. REV. FLAKE: The area that we have succeeded clearly is in the successes of schools and in the net results. I think Chris has been very fair in stating that, one, of the 65 school that we started, we're still in relationship with 62 of them. And, two, when you look at it across the board, you have 85 percent success rate. The bottom line is that the probability of failure is greatly reduced by virtue of --

Reverend Flake, 164 11/8/01 - EDUCATION - RES. 010642 throwing out statics about 85 percent rate success, without the sustainable data and the test that we're given, because if you give a test without comparing it to the other test and an equivalent sort of, you can get the results that you may want. So I'd rather that in essence within the last few years, you have not yet proven your success rate. And in fact, in the report here, these are the risks. The thing is that you are -- when you talk about risk. You talk about risk to your investment. We talk about risk to our children. So when you're talking about risk, recording core losses at our schools if we're enable to enroll enough students, well, that's fine and good. But we have 220,000 students that we're supposed to turn over to you. And then in the next, "We're experiencing rapid growth which may strain our resources and we may not be sustainable." The thing is, that your corporation in asking the City and parents of Philadelphia without any consultation with them to, in essence, bankroll your risks. Bankroll your risks without any assurances, without anything that if those risks don't materialize and your stock goes down, you will pick up and you'll leave or you'll go into bankruptcy. 165 11/8/01 - EDUCATION - RES. 010642 That's why we need local control. (Applause.)

Mr. Whittle, In the last few months --

Excuse me, Councilman Ortiz, your time is up. COUNCILMAN ORTIZ; I just want to know how much money Mr. Whittle has made in selling stock from March to today in terms of his Class A stock and others that you exercise options that were --

I'll be happy to share that with you, Councilman.

It's close to $50 million in stock that you have sold of Edison.

That's incorrect, sir. I'll be happy to provide you the correct --

I got it here, it says, Class A stock sold at $23.27 a share. Proceeds, $13,961,977. Then another 15,001 shares of Class B stock sold at and the proceeds were 22 1,163,523. Is that correct or is that wrong? 23

Well, you said 50 million, and that adds up --

No, I said 15, close 166 11/8/01 - EDUCATION - RES. 010642 to 15. It's my Latino accent.

I'm sorry I misheard you. Fifteen is close to that. I think it's also important to have a little context on that, which I would like to provide. Over the last eight years I took every dollar of my personal worth. I mortgaged my home and I invested in the company. Every dollar that you see in that sheet and it also is in that file, every dollar went to repay those debts, not to me but to J.P. Morgan, the bank that I borrowed the money from.

Thank you Councilman Ortiz. I just want to recognize that we've been joined by a Board member Christine James Brown. We have a lot of members of the community here and we are going to reconvene these meetings on Saturday. So If anyone from a community group or any of the groups want to sign up for Saturday, I know some people have to leave, then you can do that. And Jenelle Lemon is standing over there at the door if you want to do that. We're going to reconvene on Saturday at 10:00 a.m. 167 11/8/01 - EDUCATION - RES. 010642 What we have to do, we're going to put the timer on and we have to enforce the time limits because there are a lot of elected officials here that also have questions and comments. And editorial comments are good, but we have to try and maximize the use of this time. Wilson Goode, Jr., a member of the Education Committee is next.

Thank you, Madam Chair. I'm going to try to move as quickly as possible and limit my questions to Mr. Whittle regarding business relationships and Reverend Flake regarding charter schools. Let me start with the first question to Mr. Whittle. How did you establish a business relationship? What's the origin with the Commonwealth? When, where, how did it happen? Who called who? How did you develop the relationship to Commonwealth?

Our first relationship with the Commonwealth were probably related to charter schools in York and in Phoenixville, which we have launched over the last --

I meant related to 168 11/8/01 - EDUCATION - RES. 010642 Philadelphia.

Pardon?

How did you establish your business relationship related to Philadelphia?

Just in relation to Philadelphia?

Yes.

We began our relationship with the Philadelphia School District about a year ago --

With the Commonwealth of Pennsylvania, when did you starting doing business with the Commonwealth of Pennsylvania regarding Philadelphia? Who called who, when, where? How did you establish the relationship? You're a businessman, right? At some point the relationship started when it was actually business. How did you establish the relationship?

In regard to Philadelphia in this specific situation, about early July, I think in the first ten days of July, we received a call from Secretary Zogby saying that that there was a pending crisis in Philadelphia public school system that they wanted to discuss. And we went to 169 11/8/01 - EDUCATION - RES. 010642 discuss it with them.

You received a phone call from the Secretary of Education. This was before the meeting between the Mayor and the Governor?

I don't know that.

Does anyone on the panel know?

The reason is, I don't know which meeting you're referring to.

Was the relationship established before the memorandum of understanding? I don't know what happened between the Governor and Mayor in terms of why Edison was involved. I'm asking you from your standpoint --

I don't know.

You don't know how your relationship was established?

I know when we had the meeting. I don't know the exact dates of the MOU.

But it was initiated by the Commonwealth of Pennsylvania, Secretary of Education.

Yes. 170 11/8/01 - EDUCATION - RES. 010642

How did you establish your relationship with one of the community cited in the report, Universal Companies? When, where, how, who called who? REV. FLAKE: That started about better than a year ago when I received a call from Kenny Gamble's office asking if his representative could come to New York and look at what we were doing as a church in community economic development, because we build homes, we build senior citizens housing. And they wanted to look at that model, having heard me speak I think in Boston, and so they wanted to come and see the model. So that's where the whole notion evolved that you cannot build a community without addressing the problems of schools and that discussion eventually brought us into a constant dialogue about how to make some things happen.

That was around when? REV. FLAKE: That was around -- seems to me that that may have been -- that was before we got into any discussions with the State. So that was probably January of last year, not this year.

Mr. Whittle, do you have any proactive relationships in terms of you 171 11/8/01 - EDUCATION - RES. 010642 initiating trying to find business? And is your business actually dealing in distressed districts? I mean, are you, quote unquote, an ambulance chaser or do you do business in non-distressed districts?

The great bulk of our business is in what I would call non-distressed districts. A growing percentage of our district is in distressed districts. Most states in th United States have passed accountability legislation of certain types. With that accountability legislation, most states have some form of takeover provisions.

With the accountability legislation comes the Edison referral?

Pardon?

With the accountability legislation comes the Edison referral?

They're not connected.

I want to move to charter schools. Reverend Flake, why do people form charter schools?

In general, people have 172 11/8/01 - EDUCATION - RES. 010642 been forming charter schools because they are convinced that they need models for the new paradigms for delivery of public education to young people where they're not convinced that they're going -- that the schools within the system are going to turn around fast enough for them to be able to be assured that they're going to get the kind of quality education that they expect for their children. So in general, they see this is the most valuable alternative to still stay in the public sector while at the same time being able to assure that their child gets a good education.

And how does the Governor's plan affect charter schools in Philadelphia? SPEAKER: Can I add to the question about why charter schools since I used to have his job before I started the teachers college. I've established charter schools in Detroit and D.C.

Was that a promotion or demotion? SPEAKER: I saw it as a promotion because I wanted to make sure that we had quality teachers and excellent principals for the schools 173 11/8/01 - EDUCATION - RES. 010642 that we were operating and we needed to create our college to make that happen. When I talked to -- I've established charter schools with YMCAs. And for example, the YMCA has a service learning mission and they want to develop that service learning mission through K12 and there's another way for them to connect with the parents of children to deliver their services. I've also started a charter school in partnership with the YMCA in Atlanta, Georgia. In Washington, D.C., our partner is the oldest social service agency in the City, Friendship House. They pride themselves in being the social service agency to bring the first kindergarten program to Washington, the first montesory program. They saw Edison as a cutting edge reform. They wanted to be the organization to bring Edison to town. They run their after school programs in our schools. So They have a mission partnered with ministers because they see their mission as building great schools and they see supporting the public school system. And It's not a competition but expanding choice an options for parents and their communities.

Thank you. How does 174 11/8/01 - EDUCATION - RES. 010642 the Governor's plan effect charter's schools?

Gene Wade will answer that.

One of the assumptions is that charter schools -- a lot of charter operators would be interested in being partnership schools and partnering to manage schools through a different format. There's no contemplated legal change to charter schools in the district. And anyone who has a charter now obviously has a contract an a charter and will continue to operate and grow those chargers.

So is there any plan to convert other schools or charter schools in any massive way?

That was not a recommendation.

Through Edison's vision, is there a plan to take schools an convert them to charters?

No. 23

Thank you. Thank you, Madam Chair.

In this order, 175 11/8/01 - EDUCATION - RES. 010642 next we have Representative Bishop, Meyers ,and Cohen. REPRESENTATIVE

Thank you, Madam Chair. I just want to make one comment and I want to ask just one question. Sometime ago we were concerned that there was an outburst in the audience, but I do want to say that this is the first time the public has had an opportunity to comment. Previously when the meetings were held throughout the community, they absolutely were not allowed to make comments. (Applause.) REPRESENTATIVE

This is the first time, the first time since this issue came to the table that they have had an opportunity to express their desire. So I just want you to please been patient with them if they appear to be a little hostile tonight. Secondly, I just want to ask one question, and I guess it would be Mr. Whittle. In every form of life we have someone over the top of us, someone that we have to answer to. Elected officials have to answer to their constituents, and when they don't, they're voted out of office. 176 11/8/01 - EDUCATION - RES. 010642 Reverend Floyd Flake has to answer to God first, but then if his congregation is not pleased, he's out. So I want to ask Edison, and whichever one of you think should answer, who do you answer to? You who have asked for a certain amount of schools that you will be running and then a certain amount that you will be managing, who is over you? Who do you report to? And at the end of the day, if you have not done what you said that you would do, how much time do you have and who tells you pack up and leave? (Applause.)

All very good questions, and I will try to answer them to the extent that we know that today. And the reason I make that qualification is that an arrangement between Edison and whatever body is going to be in charge of the Philadelphia School System doesn't exist. But I think I can answer some of the pieces. First of all, if you look at what the Governor has proposed, Edison would report to, be hired and fired by something called the SRC, the School Reform Commission., which as proposed by the Governor has four appointees by the Governor and one 177 11/8/01 - EDUCATION - RES. 010642 appointee by the Mayor. So we would report to that commission. They would negotiate the arrangement between us. And Included in that arrangement, I am sure there will be performance standards, and there typically are in our arrangements with public entities. The most important of those performance standards is student achievement. And most of our contracts have some provision that if student achievement does no achieve this or that level by this or that date, then we can be terminated for that reason. We view that as the most important provision. REPRESENTATIVE BISHOP have you signed that contract yet? Do you know what that time is, that time frame?

In the report that we provided, we suggested to the Governor what aggressive academic goals should be for the school system of Philadelphia. Just to put it in perspective, those goals were five to seven times the current rate of academic gain in the district that we recommended to the Governor. I am sure that we're going to see, if we're ever in negotiation 178 11/8/01 - EDUCATION - RES. 010642 with the SRC, I'm sure we're going to see something like that stuck in our contract. REPRESENTATIVE

Thank you.

Let's take a break for five minutes. (Brief recess.)

We are have a couple of announcements. You know this hearing is going to recess tonight and reconvene Saturday at 10:00 a.m. At this time, all the officials here at the table have agreed to hold their questions until Saturday. And Edison has agreed to also return on Saturday, maybe not in its full complement, but they will bring people here on sat. And you know, We do have senior staff at the table. So at this point, we want to ask Edison -- we want thank you for your testimony. I know that you've made a commitment to stay. Can you have a seat over there or whatever so we can start bringing some of the community people up. Thank you. Wait a minute. We have two Board members that is won't be here on Saturday that have questions, but we really want to get to the community groups. One from Board Member from Sandra 179 11/8/01 - EDUCATION - RES. 010642 Glenn and then we'll have Board Member Dorothy Rush.

Good evening. Thank you, I'm glad to now have an opportunity to meet you. I regret that we had to spend much of our valuable time this evening being introduced. You've been here three months or so, and unfortunately, prior to today, many of us had not had a chance to meet you. So I'm glad that we were able to accomplish that. I do have two questions, if I may, Madam Chairwoman. My first question goes back to your issue that you raised at the capacity. You mentioned that you operate a total now of 136 schools serving about 75,000 students. Could you give me a breakout of how many of those schools are elementary or K to 8, how many are middle, and how many are high schools?

I going to do this approximately and then we will get you the exact numbers in writing. So I'm doing this from memory, and if somebody wants to correct me, please do. Roughly, I think it's about 60 percent elementaries, 30 to 32 percent middles, and eight to ten percent highs.

It would be helpful, understanding those are rough percentages, if I 180 11/8/01 - EDUCATION - RES. 010642 could have the actually numbers of your 136 schools that fall into those categories.

We will get you that. I think the percentage I gave you is in the zone.

Understood. Am I correct in understanding that in terms of actually operating school districts, you are currently operating of 9 11 schools in Chester, is that correct? 10

We have three situations where we are operating under state arrangements, one in Baltimore, Maryland, where the state has taken control of three schools. One is a partnership between a board of education and the State Board of Michigan, which is Inkster, Michigan, which is four or five schools. And then Chester is correct, 10 of 11.

Now, in Baltimore, you are operating the district?

No. 21

You are operating in three schools within the Baltimore School District?

Yes.

So in terms of school districts, there are actually two, if I'm correct, 181 11/8/01 - EDUCATION - RES. 010642 Chester and Inkster, Michigan, is that correct.

Chris Surf.

First of all, I apologize for coming in a minute late. If I might I'd like to offer one clarification to that question. With the 75,000 students that is we currently serve across the country, that number of students we think should be thought of as a national School District --

I do understand that.

In a sense, for example, that number is greater than a Atlanta, greater than Denver, Greater than D.C.

Sir, honestly, I do understand that, but that's not my question. In terms of coming in and operating school districts, currently established school districts, you would describe that situation where, Chester --

No, actually, we wouldn't in Chester. We were actually, I think, asked this question earlier, do we operate any school districts under the arrangements similar to what has been proposed to the Governor. The answer is no. 24

So Currently there are no 25 school districts that you're operating? 182 11/8/01 - EDUCATION - RES. 010642

Other than our own.

Other than YOUR 136 schools in states. 5

Right. 6 MS GLENN: You also refer to a list of, 7 I think, 65 contracts of which 62 I think you said 8 had been renewed? 9

62 are still in existence. 10

Can you then reconcile some 11 things that I had been reading about a number of 12 other schools and/or school districts where either 13 the contract had been terminated or was being 14 considered to be terminated. And I just want to 15 make sure that this is accurate reporting. I've 16 read this in several places. Wichita, Kansas, I 17 understand you have four schools, two of them there 18 is some concern about Edison 's operation and some 19 consideration of ending your participation at least 20 in those two schools. Is that accurate assessment? 21

If you were to review all 22 of our 136 schools, and we said this earlier, we said 84 percent of schools are up, that means 16 percent aren't. And What I'm saying is in some of those cases, you're going to hear people that are 183 11/8/01 - EDUCATION - RES. 010642 concerned about that and should be concerned about that.

I just want to make sure that I have an accurate list of the school districts where that issue has been raised.

You asked a very specific question about Wichita, and let me answer that. We have four schools in Wichita. There have been some newspaper level concerns about our performance in one or two, depending how you count. We have not been formally notified or advised by the district of superintendent of his or the board's intention to terminate that relationship. But there is some stuff in the newspapers.